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THE  UNIVERSITY  OF  TEXA; 

DEPARTMENT  OF  EXTENSION 


r  °f  Extensio*  <>f  the  University  of  Texas 

established  for  the  purpose  of  rendering  service  to  the  peopl< 
the  State  generally,  and  especially  to  those  who  are  unable  to  att 
he  University     The  work  of  this  Department  is  carried  on  nr 
the  following  five  Divisions  : 

PUBLIC  DISCUSION  DIVISION. 

This  Division  has  immediate  charge  of  'The  University  In 
scholastic  League/'     This  is  an  organization  of  all  the -school* 
Texas  for  the  purpose  of  promoting  contests  in  debate,  deck] 
.ion,   and   athletics.     The   University  is   desirous   of   aiding 
schools  in  the  matter  of  training  for  citizenship;  and  also  to 
teachers  in  developing,    controlling,    and    standardizing    athl< 
activities  in  the  schools. 

This  Division  is  also  engaged  in  the  preparation  of  refere 
Jists  and  material  on  various  subjects  of  general  interest,  and 
collection  of  small  traveling  libraries  for  loaning  to  citizens 
Texas  upon  application.  Books  and  pamphlets  thus  loaned  n 
be  kept  not  longer  than  two  weeks.  The  person  to  whom  matei 
s  loaned  pays  the  carriage  (postage  or  express)  both  ways  Eei 
ence  lists,  together  with  more  or  less  material  in  the  way  of  boo 
pamphlets,  or  bulletins,  are  now  ready  on  the  following  subiee 
Commission  Form  of  City  Government;  Compulsory  Educatic 
educational  Improvement  and  Social  Reform;  Initiative  and  R 
erendum;  Municipal  Ownership  of  Public  Utilities;  Old  Age  Insi 
ance;  Penitentiary  Refrom;  Prohibition  and  the  Liuor  Problei 
Tariff  and  Free  Raw  Materials;  and  Woman  Suffrage. 

Clippings  and  miscellaneous  material  have  also  been  collect 
on  various  other  subjects.     Correspondence  is  invited. 

PUBLIC  LECTURE  DIVISION. 

t  Provision  has  been  made  to  allow  members  of  the  staff  of  instrt 
tion  to  deliver  public  lectures  in  Texas  towns,  when  asked  to  do  ; 
About  a  hundred  lectures  in  fifteen  different  lines  of  work  are  n< 
available. 

(CONTINUED  ON  INSIDE  OF  BACK  COVEB.) 


I 


BULLETIN 


252-7 13-2m-3467 


OF 


E  UNIVERSITY  OF  TEXAS 


NO.  284 
FOUR  TIMES  A  MONTH 


?.NSION  SERIES  34 


JUNE  22,   1913 


PUBLIC  DISCUSSION  DIVISION 

OF  THE 
DEPARTMENT  OF  EXTENSION 


rnter  collegiate  Debates  and  Bibliographies 


On 


Old  Age  Insurance 


And 


Banking  and  Currency  Reform 


PUBLISHED  BY  THE  UNIVERSITY  OF  TEXAS 

AUSTIN,  TEXAS 


Entered  as  second-class  mail  matter  at  the  postoffice  at  Austin,  Texas 


T)  * 


PEEEACE. 

This  bulletin  contains  the  affirmative  and  negative  speeches  of 
the  University  of  Texas  debating  teams  in  the  intercollegiate  de- 
bates of  1913,  together  with  bibliographies.  The  main  speeches 
only  are  included,  arranged  in  the  order  of  affirmative-negative  in 
each  case. 

The  University  of  Texas  is  a  member  of  two  intercollegiate  debat- 
ing leagues:  The  Triangular  Debating  League,  consisting  of  the 
State  Universities  of  Colorado,  Missouri,  and  Texas ;  and  the  Penta- 
gonal League  of  Southern  State  Universities,  consisting  of  the  State 
Universities  of  Arkansas,  Louisiana,  Mississippi,  Tennessee,  and 
Texas.  In  the  Triangular  League  the  question  for  debate  was,  Re- 
solved, that  a  Policy  of  Compulsory  Old  Age  Insurance  should  be 
adopted  by  the  Federal  Government,  Constitutionality  waived,  Mr. 
Eugene  H.  Cavin  of  Galveston  and  Mr.  Douglas  Tomlinson  of 
Hillsboro  supported  the  affirmative  of  this  question  in  a  debate  with 
ihe  University  of  Colorado,  held  at  Austin  on  April  18,  1913,  the 
negative  winning  by  a  vote  of  two  to  one-.  On  the  same  date  a 
Texas  team  consisting  of  Mr.  Charles  I.  Francis  of  Denton  and  Mr. 
George  W.  Dupree  of  Clairette  upheld  the  negative  of  the  same 
question  in  a  debate  with  the  LTniversity  of  Missouri  at  Columbia, 
Missouri,  the  Texas  team  winning  a  unanimous  deci°ion  in  this 
debate. 

In  the  Pentagonal  League  series  the  question  for  debate  was. 
Resolved,  that  the  Plan  for  a  National  Reserve  Association  ax  pro- 
posed by  the  United  States  Monetary  Commission  offers  a  desirable 
remedy  for  the  defects  of  our  present  Banking  and  Currency  Sys- 
tems. Mr.  Theodore  A.  Gatchell  of  Austin  and  Mr.  Sylvan  Lang  of 
San  Antonio  upheld  the  affirmative  side  of  this  question  in  a  debate 
with  the  University  of  Mississippi  at  Austin,  Texas,  April  11, 
1913.  The  Texas  team  won  a  unanimous  decision.  On  the 
same  date  a  team  from  the  University  of  Texas,  consisting  of  Mr. 
Winfree  W.  Meachum,  Jr.,  of  Anderson  and  Mr.  Tom  B.  Ramev, 
Jr.,  of  Tyler  upheld  the  negative  of  the  same  question  in  a  debate 
with  the  Universitv  of  Tennessee  at  Knoxville,  Tennesse.  In  this 
debate  the  affirmative  side  won  the  decision  by  a  vote  of  two  to  one. 

It  is  interesting  to  note  that  two  of  the  members  of  the  Texas 
team's  were  former  district  winners  in  the  debates  of  the  State  De- 
bating and  Declamation  League. 

M261421 


UNIVERSITY  0¥  TEXAS  INTERCOLLEGIATE  DEBATING,  TEAMS,  1913. 
In  order  from  left  to  risftt,  Texas-Colorado  Debate:    Eugene  H.  Gavin 


and  Douglas  Tomlinson. 
and  George  W.  Dnpree. 


Texas-Missouri  Debate:     Charles  I.   Francis 


UNIVERSITY  OF  TEXAS  INTERCOLLEGIATE  DEBATING  TEAMS,  1913. 

In  order  from  loft  to  rio-lit.  Texas-Mississippi  Debate:  Theodore  A. 
Gate-hell  and  Sylvan  Lang-.  Texas-Tennessee  Debate:  Tom  B.  "Ramey 
and  Win  free  W.  Meacrmm,  Jr. 


COMPULSORY  OLD  AGE  INSURANCE. 


FIEST  AFFIRMATIVE  SPEECH. 

BY  EUGENE  H.  GAVIN,  OP  GALVESTON,  TEXAS. 

Mr.  Chairman,,  Honorable  Judges,  Ladies  and  Gentlemen: 

In  offering  the  plan  of  old-age  insurance  which  we  of  the  affirma- 
tive advocate  tonight,  we  offer  a  plan  which  England,  after  forty 
years  of  experiment  with  industrial  insurance,  has  seen  fit  to  follow 
as  the  best  remedy  for  the  relief  of  her  old-age  poor ;  a  plan  which 
has  operated  in  Germany  for  half  a  century,  and  which  has  been 
found  to  work  so  successfully  that  this  year  the  plan  in  Germany 
was  extended  three-fold;  a  plan  which  Denmark,  which  France, 
which  every  great  civilized  country  in  the  world  to-day,  with  the 
single  exception  of  these  United  States,  is  successfully  operating 
and  constantly  extending. 

Briefly,  the  plan  is  this :  Throughout  the  laborer's  active  life,  a 
small  monthly  premium  is  to  be  paid  for  the  support  of  old  age. 
Of  this  small  premium,,  the  laborer  pays  a  part,  the  employer  pays 
a  part,  and  the  government  pays  a  part.  The  money  thus  raised 
is  to  be  used  for  supporting  those  who  would  otherwise  be  objects 
of  charity  in  their  old  age. 

In  the  discussion  this  evening,  it  is  my  purpose  to  present  the 
needs  of  some  plan  for  the  relief  of  old  age  poverty  in  this  country, 
and  the  intrinsic  merits  of  the  plan  which  we  propose,  while  my 
colleague  will  describe  the  successful  working  of  the  plan  in  every 
great  and  civilized  country  in  the  world,  except  in  these  United 
States. 

Year  by  year,  as  this  country  grows  older,  there  is  a  gradual  in- 
crease in  the  percentage  of  the  old  people  in  our  population.  The 
census  of  1910  shows  that  from  1900  to  1910  the  number  of  people 
in  this  country  who  had  reached  the  age  of  65  and  over  increased 
869,000,  or  according  to  population,  an  increase  of  two-tenths  per 
cent.  A  large  number  of  this  steadily  increasing  class  are  too  poor 
to  provide  for  themselves.  This  offers  the  steadily  increasing  prob- 
lem of  providing  for  them. 

There  are  in  "this  country  18,000,000  wage  earners.  There  are 
1,250,000  former  wage  earners  who  have  reached  the  age  of  65  in 
want,  and  are  forced  to  depend  upon  public  and  private  charity 
for  support.  Now,  if  everyone  of  these  1,250,000  old  age  depend- 
ents had  a  monthly  income  to  take  care  of  him,  there  would  be  no 
old  age  poverty.  If  we  could  give  just  such  an  income  to  every 


8  •  .  ',  /      University  of  Texas  Debates 

old  age  dependent,. ij;  would  certainly  be  desirable;  if  we  could  give 
this  income  at  a  very  small  cost,  it  would  be  more  desirable;  if  we 
could  give  this  income  at  no  additional  cost  at  all,  it  would  certainly 
be  most  desirable.  Let  us  see. 

In  an  effort  to  take  care  of  these  1,250,000  former  wasre  earners 
who  have  reached  the  age  of  65  and  who  are  in  want,  the  people 
of  this  country  are  spending  annually  in  •nublic  and  private  charity, 
$220,000,000.  Yet,  although  we  are  spending  enough  monev  to 
adequately  care  for  our  old-age  poor,  they  are  not  adequately  cared 
for.  Why?  Because  of  the  lack  of  a  systematic  method  for  col- 
lecting and  administering  the  money  which  is  now  being  spent  in  a 
haphazard  manner !  Thus  we  see  that  this  situation  exists :  We 
have  1,250,000  old  age  dependents.  We  spend  enough  money  to 
provide  for  them.  But  they  are  not  provided  for.  Why  ?  Because 
we  have  no  systematic  method  for  collecting  and  administering 
the  money  which  we  are  spending!  Now,  ladies  and  gentlemen, 
what  is  it  that  we  propose  to  do?  We  simply  take  the  1.250,000 
old  age  dependents  we  have.  We  then  take  the  $220,000,000  we 
are  spending.  And  what  we  propose  to  do  is  to  provide  a  systematic 
method  for  collecting  and  administering  this  money  instead  of 
allowing  it  to  be  wasted  in  the  present  haphazard  manner. 

Can  such  a  plan  be  worked?     Let  us  see. 

We  have  18,000,000  wage  earners.  We  are  spending  $220,000,- 
000  to  take  care  of  the  1,250,000  wap-e  earners  who  reach  old 
age  dependency.  But  we  are  spending  this  money  under  a 
very  haphazard  plan,  the  administration  of  which  costs  a  waste- 
ful per  cent  of  the  capital.  But  we  propose  to  do  this:  Dividing 
this  $220,000,000  by  18,000,000  wage  earners,  we  find  that  $12 
per  wage  earner  must  be  raised  per  year.  Dividing  thig^  $12  per 
year  by  12,  we  find  that  $1  per  wage  earner  must  be  raised  per 
month.  Dividing*  this  $1  per  month  by  three,  that  is,  the  part  of 
the  premium  paid  by  the  government,  the  employer,  and  the  em- 
ployee, we  find  that  the  monthly  premium  which  must  be  paid  in 
order  to  put  our  plan  into  successful  operation  is  33^  cents.  Now. 
how  about  the  cost  of  administration?  Whv  even  in  Germany,  the 
country  against  which  the  opponents  of  our  plan  complain  most 
bitterlv,  the  administration  only  costs  7^  ner  cent.  So  we 
find  that  under  our  plan,  the  $220,000.000.00  necessary  to 
support  the  aged  poor,  can  be  raised  at  the  small  cost  of  a 
premium  of  33^  cents.  Furthermore,  under  our  plan,  the  admin- 
istration of  this  money  only  costs  7}  per  cent,  whereas,  under  the 
present  plan  the  administration  of  this  money  costs  many  times  as 
much.  In  other  words,  we  simply  replace  chaos  with  system.  Our 


Compulsory  Old  Age  Insurance  9 

plan  is  not  one  cent  of  additional  cost.  We  simply  propose  that 
the  money  we  are  now  spending  shall  be  collected  and  administered 
in  a  systematic  manner,  instead  of  the  present  haphazard  manner, 
in  order  to  save  the  waste  of  misdirected  expenditure. 

How  much  better  is  our  plan  than  the  present  plan  of  individual 
saving !  Under  the  present  plan  of  individual  saving,  each  laborer 
must  provide  all  the  money  which  will  be  needed  to  care 
for  him  in  his  old  age.  But  only  one  out  of  every  fourteen  ever 
reaches  the  age  of  65  years,  and  needs  this  annuity.  Therefore, 
the  present  plan  is  costing  the  laborers  as  a  class,  fourteen  times 
as  much  as  is  necessary.  To  illustrate :  Suppose  fourteen  laborers 
are  serving  under  the  present  plan  to  provide  for  old  age  depend- 
ency. Suppose,  for  example,  $100  apiece  will  be  needed  to  sup- 
port those  who  reach  old  age  dependency.  Now  we  have  seen  that 
only  one  of  these  fourteen  laborers  reaches  old  age  dependency. 
So.  while  these  fourteen  laborers  must  each  save  $100  apiece,  mak- 
ing a  total  of  $1400  which  must  be  saved,  vet  only  one  of  them 
reaches  old  age  dependency,  and,  therefore,  only  $100  is  needed  to 
provide  for  old-age  dependency  of  this  class  of  fourteen.  So  we 
see  that  in  providing  for  old  age  dependency  under  the  plan  of 
individual  saving,  for  every  $100  needed,  $1400  must  be  raised. 
Therefore,  under  our  plan,  $1  of  savings  will  go  as  far  as  $14  of 
savings  will  go  under  the  present  plan.  Then,  since  our  plan  does 
everything  that  the  present  plan  of  individual  saving  could  do,  and 
only  costs  one-fourteenth  as  much,  isn't  our  plan  better  than  the 
present  plan?  But  granting  the  merits  of  our  plan,  some  have 
questioned  the  right  of  the  government  to  make  it  compulsory. 
Ladies  and  gentlemen,  the  government  itself  is  based  ur>on  the 
right  of  society  to  control  individuals  where  the  welfare  of  society 
demands  it.  Individuals  are  compelled  to  pay  taxes.  Why? 
Because  the  welfare  of  society  demands  it.  Individuals  should  be 
compelled  to  pay  the  premium  on  an  old-age  insurance  policy ! 
Why  ?  For  the  same  reason  that  the  payment  of  taxes  is  compul- 
sory: Because  the  welfare  of  society  demands  it!  Because  the 
rights  of  the  individual  are  subordinate  to  the  rights  of  society ! 

But  let  us  see  if  the  compulsory  feature  we  propose  is  as 
bad  as  its  opponents  would  have  it  seem.  Fearing  compulsion  be- 
cause of  the  way  it  sounds,  it  opponents  say :  Let  the  plan  be  vol- 
untary. But  a  voluntary  plan  could  only  succeed*  if  the  laborers 
would  voluntarily  take  advantage  of  it.  Then,  if  the  laborers 
will  voluntarily  take  advantage  of  the  plan  anyhow,  we  can  do  no 
possible  harm  by  adding  a  clause  which  requires  them  to  do  so, 
because  you  do  not  affect  a  man  when  you  require  him  to  do  that 


10  University  of  Texas  Debates 

which  he  will  do  anyhow.  Suppose  the  law  which  requires  men 
to  wear  clothes  when  they  go  out  on  the  street  were  to  be  repealed ! 
Yet  surely  we  would  all  wear  clothes  voluntarily.  Then  suppose 
that  the  next  day  the  law  requiring  men  to  wear  clothes  were  to  be 
reenacted !  How  much  would  that  affect  us  ?  Not  one  jot ! 
Why?  Because  it  would  simply  require  us  to  do  that  which  we 
would  do  anyhow ! 

So,  if  our  opponents  attack  this  compulsory  feature,  they  find 
themselves  in  this  embarrassing  predicament:  If  the  voluntary 
plan  will  not  succeed,  then  the  system,  if  adopted  at  all,  must  be 
compulsory.  On  the  other  hand,  if  the  voluntary  plan  will  succeed, 
it  must  be  universally  adopted.  If  it  will  be  universally  adopted 
anyhow,  then  the  addition  of  a  clause  requiring  it  to  be  adopted 
will  not  in  fact  coerce  anybody. 

Now,  having  seen  that  the  compulsory  feature  of  this  plan  is 
not  at  all  the  paternalistic  bogie  its  opponents  would  have  von 
believe,  we  next  naturally  inquire :  Is  the  compulsory  feature  sim- 
ply a  harmless  addition,  or  will  its  adoption  do  anv  affirmative 
good  ?  Even  if  the  experience  of  other  countries  had  not  demon- 
strated that  the  compulsory  feature  is  necessary  to  the  successful 
administration  of  the  plan,  the  compulsory  feature  would  still  be 
rendered  desirable  because  of  the  money  it  will  save.  Any  volun- 
tary system  must  be  carried  on  by  solicitors.  Insurance  company 
statistics  show  that  it  costs  40  per  cent  of  the  premiums  to 
solicit  and  collect  them.  Therefore,  any  voluntary  nlan  would 
cost  40  per  cent  more  than  will  our  plan,  which  dispenses  with 
the  services  of  these  solicitors  and  collects  the  insurance  through 
the  employers. 

If  a  voluntary  plan,  then,  would  succeed,  the  addition  of  a  com- 
pulsory feature  could  do  no  harm:  since  the  compulsory  feature  is 
necessary  to  the  successful  administration  of  the  plan,  and,  further- 
more, since  the  compulsory  feature  will  save  to  the  aged  poor  40 
per  cent  of  their  savings  which  under  a  voluntary  plan  they  would 
lose,  can  any  one  seriously  contend  that  the  compulsory  feature 
is  not  to  be  desired  ? 

But  aside  from  the  good  which  thus  directlv  flows  from  the 
plan,  there  is  another,  I  would  almost  say  a  greater  reason  for  its 
adoption.  Picture  to  yourselves  the  "worn-out  toiler,  turned  from 
the  ranks  of  the  industrial  army  because  he  is  too  old  to  work. 
Where  does  he  go  when  the  day  of  his  usefulness  is  past?  Some- 
times he  goes  to  the  poor-house;  sometimes  he  goes  to  the  street- 
corner  to  beg;  sometimes  he  goes  to  the  home  of  some  poor  son  or 
daughter,  where,  although  he  knows  there  waits  the  loving  wel- 


Compulsory  Old  Age  Insurance  11 

corne,  he  also  knows  he  is  too  heavy  a  burden.  So  the  burden~of~ 
the  old  man's  support  falls  at  last  upon  the  father  of  a  family 
upon  whose  shoulders  too  many  burdens  already  bear  down.  What 
is  the  result?  In  thousands  of  cases  the  children  of  this  family 
must  give  up  their  education  and  go  to  work.  The  burdens 
must  be  borne !  The  child  must  help  ! 

And  of  what  avail  in  such  cases,  let  me  ask  you,  are  your  com- 
pulsory education  and  your  child  labor  laws?  What  can  they  do 
when  the  wolf  must  be  driven  from  the  door?  A  thing  must  be 
possible  before  it  can  be  done.  Give  us  this  system.  Give  this 
old  man  his  insurance  policy,  and  let  him  go  to  that  home  not  as 
a  burden;  it  may  be  as  a  help.  Give  the  child  of  this  home  a 
chance,  and  let  his  footsteps  turn  from  the  factory  whistle  and 
answer  the  school  bell.  Then  will  you  build  up  a  healthy  citizen- 
ship of  free  Americans ! 

Will  you  reject  this  reform,  and  turn  these  thousands  of  chil- 
dren away  from  the  door  of  equal  opportunity  which  we  Americans 
love  to  boast  is  open  to  all?  Will  you  reject  our  plan  when  we 
have  shown  you  that  there  is  a  steadily  growing  need  for  some 
plan  for  the  care  of  the  aged  poor  in  this  country,  because  the 
percentage  of  aged  poor  among  our  people  is  steadily  increasing: 
that  our  plan  makes  adequate  provision,  and  without  additional 
cost.  beca.use  it  simply  means  that  the  money  which  we  are  now 
spending  improperly,  shall  be  spent  properly;  that  our  plan  i? 
better  than  the  present  plan  of  individual  saving,  because  our.  pi  an 
does  everything  that  the  present  plan  does  and  onlv  costs  the 
laborer  one-fourteenth  as  much;  that  the  compulsory  feature  is  to 
be  desired,  because  it  harms  no  one,  is  necessary  to  the  successful 
administration  of  the  plan,  and  will  save  to  the  aged  poor  forty 
per  cent  of  their  savings,  which  under  a.  voluntary  r>lan  would 
have  to  be  paid  to  solicitors;  that  it  will  relieve  thousands  of 
families  of  a  burden  which  will  enable  the  children  of  these  fami- 
lies to  go  school. 

It  is  for  these  reasons,  together  with  the  fact  that  commilsory 
old  age  insurance  has  been  adopted  with  marked  success  in  every 
civilized  country  in  the  world,  except  in  these  United  States,  that 
we  of  the  affirmative  submit  that  the  plan  is  necessary,  practicnl 
and  just,  and  should,  therefore,  be  adopted  in  this  country. 


12  University  of  Texas  Debates 

FIRST  NEGATIVE  SPEECH. 

BY  GEORGE  M.  DUPREE,  OF  CLAIRETTE,   TEXAS. 

Mr.  Chairman,  Ladies  and  Gentlemen: 

A  system  of  compulsory  old-age  insurance,  administered  by  a 
host  of  Federal  officials,  reaching  out  over  forty-eight  states  of 
diverse  interests  and  different  economic  conditions,  involving  the 
incomes  of  twenty-five  million  laborers,  in  order  that  a  few 
thousand  workmen  may  become  so-called  financially  independent — 
this  is  the  proposition  which  the  affirmative  is  called  upon  to  sup- 
port. It  must  be  understood  in  the  beginning,  that  the  question 
is  not  whether  this  old-age  insurance  is  better  than  our  present 
conditions,  but  whether  or  not  such  a  system  recommends  itself  to 
the  American  people  as  a  fixed  governmental  policy.  Do  you 
know,  gentlemen,  that  in  Germany  under  compulsory  old-age 
insurance.,  pauperism  is  actually  increasing,  while  in  this  country, 
according  to  government  statistics,  pauperism  is  decreasing?  Do 
you  know  that  the  countries  adopting  old-age  insurance  have  made 
it  a  mere  incident  of  unemployment,  accident,  invalidity  and  other 
phases  of  insurance?  Do  you  know  that  every  nation  adminis- 
tering forms  of  old-age  relief  has  adopted  that  policy?  We  of  the 
negative  oppose  the  adoption  of  such  a  measure  for  the  following 
reasons  : 

First:  The  conditions  of  our  society  are  not  such  as  to  war- 
rant the  adoption  of  the  proposed  plan. 

Second:  A  system  of  compulsory  old-age  insurance  admin- 
istered by  the  Federal  Government  is  inexpedient. 

Third :  A  system  of  compulsory  old-age  insurance  administered 
by  the  Federal  Government  is  impracticable,  and, 

Fourth :  A  consideration  of  the  evils  that  would  arise  from  the 
administration  of  such  a  system  does  not  recommend  its  adoption 
as  a  desirable  remedial  measure. 

It  is  my  purpose  to  show  that  this  system  is  unnecessary  and 
inexpedient.  My  colleague  will  show  that  such  a  system  is  im- 
practicable and  undesirable. 

The  supporters  of  compulsory  old-age  insurance  must  show 
that  the  conditions  are  such  as  to  warrant  the  adoption  of  this 
system  in  the  United  States.  They  must  show  that  the  proposed 
plan  is  in  conformity  with  American  customs  and  ideas,  and  that 
such  a  measure,  considering  the  social  forces  now  at  work,  will 
solve  the  problem  of  old-age  dependency  in  an  expedient,  desirable 


Compulsory  Old  Age  Insurance  13 

and  practicable  manner.  We  wish  to  provide  for  such  denendents^ 
but  it  does  not  necessarily  follow  that  we  should  adopt  the  plan 
proposed  by  the  opposition.  Let  us  investigate  the  necessity  for 
adopting  any  such  plan. 

The  American  laborer  is  not  to  be  compared  with  those  of  other 
nations.  He  has  a  social  standing,  a  force  of  organization  behind 
him,  and.  the  individual  influence  of  social  welfare  of  which  no 
other  nation  can  boast.  Our  dependent  workmen  are  now  cared 
for  by  mediums  of  support  based  upon  our  peculiar  economic  con- 
ditions and  American  means  of  relief, — mediums  direct  in  their 
nature,  relieving  the  individual  laborer  according  to  local  condi- 
tions. 

An  organization  characteristic  of  our  American  methods  is  the 
United  Charities.  This  agency,  though  still  in  its  infancy,  is  the 
real  basis  for  the  solving  of  our  poverty  problem  without  resort 
to  a  plan  not  in  conformity  to  our  American  ideas  and  customs, — 
a  medium  having  for  its  aim  the  better  conditions  of  the  poor 
and  for  its  basis  the  solving  of  social  diseases  by  trained  students 
of  such  conditions.  Whatever  its  faults  may  be,  there  will  be 
remedies  in  the  future,  for  the  American  laborer  is  vitallv  inter- 
ested in  this  question.  The  purpose  of  the  American  mediums 
is  to  allow  individual  responsibility,  to  furnish  the  motive  for 
encouraging  the  laborer  to  provide  for  his  future  welfare,  and 
when  he  fails,  to  extend  to  him  the  needed  aid. 

But  aside  from  the  gigantic  social  forces  which,  when  estab- 
lished, will  alleviate  our  old-age  problem  in  accordance  with  our 
local  conditions  and  industries,  there  are  certain  fundamental 
objections  to  the  expediency  of  the  proposed  measure.  The  opposi- 
tion wish  to  impose  this  Federal  system  without  regard  to  our 
diverse  interests  and  different  economic  conditions.  France,  Den- 
mark, Australia,  England  and  other  nations  have  adopted  forms 
of  old-age  insurance,  but  did  they  adopt  the  insurance  policy 
which  Germany  administers?  No,  they  have  adopted  policies 
peculiar  to  their  own  economic  conditions  and  industrial  labor. 
Germany,  a  manufacturing  nation,  adopted  her  insurance  to  meet 
the  needs  of  such  a  class  of  workmen.  Denmark,  a  dairying  cen- 
ter, has  conformed  her  insurance  to  meet  the  needs  of  this  class; 
Australia,  an  agricultural  country,  has  adopted  a  svstem  to  pro- 
vide for  this  principal  class  of  laborers;  England  a  manufacturing 
and  commercial  nation,  has  provided  a  medium  to  meet  the  needs 
of  that  larger  class  of  workmen.  Those  nations  with  mining  as  a 
principal  industry  must  conform  their  insurance  to  meet  that 


14  University  of  Texas  Debates 

particular  class  of  employees.  Texas  represents  a  greater  diversity 
of  interests  and  conditions  than  all  Germany.  New  Jersey  is 
closely  allied  to  Denmark  in  the  conditions  of  its  labor  problem; 
Kentucky  or  any  of  our  agricultural  and  stock-raising  states  pre- 
sents economic  conditions  of  labor  much  resembling  those  of  Aus- 
tralia; the  New  England  States  presents  the  manufacturing  and 
commercial  interests  that  are  to  be  found  in  Great  Britain.  Yet 
the  opposition  propose  a  Federal  system  operating  uniformly  in  the 
agricultural,  manufacturing,  the  dairying  and  the  mining  sections 
of  the  United  States!  They  suggest  a  scheme  which  proposes  to 
unite  the  labor  conditions  of  Germany,  Denmark,  Australia  and 
England — all  of  which  exist  in  the  United  States — under  one 
iron-clad  system  of  insurance,  while  each  of  these  countries  has 
found  it  expedient  to  adopt  that  insurance  policy  best  suited  to 
their  labor  interests. 

But  the  greatest  evils  of  the  Federal  compulsory  old-age  insur- 
ance system  are  not  that  it  is  unnecessary,  nor  that  it  is  incapable 
of  adapting  itself  to  varying  economic  social  conditions,  but  its 
greatest  objection  is  to  be  found  in  the  complexity  which  is  inher- 
ent in  the  administration  of  such  a  law,  Germany,  after  a  practi- 
cal experiment  of  twenty-five  years  under  the  most  favorable  condi- 
tions, is  confronted  with  these  three  indictments  by  Mr.  Frieden- 
burg,  an  organizer  of  the  system,  and  for  years  President  of  the 
Imperial  Commission.  He  says,  first,  that  the  state  insurance, 
specifically  designed  to  replace  pauperism  and  charity,  is  itself 
merely  pauperism  under  another  form ;  second,  that  the  system  has 
fostered  to  an  incredible  extent  the  German  evil  of  Bureaucratic 
formation,  for,  seemingly  sound  in  theory,  it  has  become  a  burden 
to  the  German  nation  on  account  of  its  complex  and  intricate 
administrative  machinery;  and  third,  that  the  whole  system  has 
become  a  hot-bed  of  fraud  and  corruption,  and,  therefore,  a 
source  of  demoralizing  influences. 

Compare,  if  you  p]ease,  the  facilities  for  administering  such  a 
law  in  Germany  with  the  facilities  that  exist  in  this  country,  and 
yon  can  not  help  but  see  that  the  evils  which  have  developed  in 
that  military  nation,  used  to  the  rule  of  an  iron  hand,  would 
be  augmented  in  this  country  one  hundred  fold.  Consider  for 
a  moment  the  fact  of  a  Federal  system  of  commilsory  insurance 
reaching  out  over  forty-eight  states  of  which  Texas  alone  has 
more  varied  economic  conditions  and  a  wider  range  of  industries 
and  population  than  the  entire  German  Empire.  Consider  the 
vast  amount  of  clerical  work  required  for  the  weekly  assessment 


Compulsory  Old  Age  Insurance  15 

scheme;  the  hoard  of  collectors,  inspectors,  committees,  bureaus, 
and  courts  required  for  the  administration  of  the  plan.  Consider 
the  opportunity  offered  for  political  pull,  for  the  corruption  of 
officials,  and  I  believe  that  you  will  realize  the  expediency  of 
rejecting  such  a  measure  as  is  proposed.  On  the  dockets  of  the 
German  Courts  to-night  there  are  four  hundred  thousand  insurance 
cases  demanding  .adjudication,  and  although  the  assessments 
against  the  employers  have  constantly  increased,  the  cry  of  the 
masses  on  the  one  hand  is  still  heard  that  "Capital  is  the  oppressor 
of  labor.  We  demand  a  fair  division  of  the  profits  of  industry." 
On  the  other  hand,  we  hear  the  quiet  warning  voice  of  the  ?tudent 
of  political  economy,  and  the  admonition  of  the  patriot,  that  "The 
moral  fibre  of  the  people  is  weakening,  and  the  spirit  of  class  hatred 
is  becoming  more  intense."  So  great  has  become  the  complexity 
of  the  German  system,  so  numerous  the  evils  arising  under  the 
administration  of  the  law,  that  students  have  been  led  to  character- 
ize this  scheme  as  "the  cancer  which  is  destroying  the  vitals  of  our 
country." 

Now,  ladies  and  gentlemen,  if  there  exists  in  the  United  States 
to-day  these  great  remedial  agencies  to  which  your  attention  has 
been  directed,  and  which  promise  to  effect  a  desirable  solution  of 
this  problem  in  the  future,  in  conformity  with  American  methods 
and  customs,  then  the  plan  of  the  affirmative  is  wholly  unnecessary. 
That  the  plan  of  a  compulsory  old-age  insurance  system  in  this 
country  is  inexpedient  may  readily  be  seen  when  one  takes  into  con- 
sideration our  diverse  interests  and  varied  economic  conditions, 
our  different  standards  of  living  and  wages  paid  to  American 
laborers,  and  finally,  the  plan  is  inexpedient  because  of  its  com- 
plexity of  administration  and  its  effect  upon  individual  character. 
If  my  colleague  can  show  that  it  is  both  impracticable  in  admin- 
istration and  undesirable  in  its  effects  upon  the  individual  and 
upon  our  citizenship  in  general,  then  we  ask  you  to  reject  a  system 
which  is  not  onlv  incompatible  with  our  varied  economic  conditions, 
but  foreign  to  the  social  tendencies  of  our  country,  to  the  charac- 
teristics of  our  citizenship,  and  to  the  policies  of  our  government. 

S-ECOND  AFFIRMATIVE  SPEECH. 

BY   DOUGLAS   TOMLINSON",    OF    HILLSBORO,    TEXAS. 

The  most  accurate  insurance  statistics  show  that  for  everv  one 
thousand  persons  living  at  the  age  of  twentv,  five  hundred  will  be 
living  at  the  age  of  sixty- five,  and  two  hundred  of  these  will  be 


16  University  of  Texas  Debates 

in  poverty  and  want.  There  are  in  this  country  to-day  1/250,000 
human  beings  with  human  flesh  and  blood  and  hearts  who  are 
suffering  the  miseries  of  old-age  poverty,  too  old  to  work  any  more, 
begging  or  dependent. 

My  colleague  has  shown  in  dollars  and  cents  that  these  aged 
poor  can  be  cared  for  under  our  plan  without  additional  cost  what- 
ever, because  our  plan  replaces  the  present  unorganized  wasteful- 
ness with  an  efficient  system.  Our  plan  will  solve  the  problem. 

All  other  plans  are  admitted  make-shifts.  No  other  plan  in  the 
history  of  the  world  has  ever  pretended  to  solve  the  problem  of  old- 
age  dependency.  In  the  history  of  mankind,  only  three  other  gen- 
eral plans  have  ever  been  offered :  first,  pensions  or  insurance  by  pri- 
vate corporations  like  the  Steel  Trust;  second,  Free  Government 
Pensions;  and  third,  Voluntary — instead  of  Compulsory — Govern- 
ment Insurance. 

Of  these  three  plans,  pensions  for  aged  employees  by  private  cor- 
porations is  the  worst,  because  many  corporations  use  the  scheme 
not  so  much  to  provide  for  their  aged  employees  as  to  add  to  the 
company's  profit.  For  example,  the  Cambria  Steel  Company 
makes  a  profit  of  $11,822  a  year  from  their  philanthropic  old-age 
pension  department.  Further,  old-age  insurance  for  employees 
by  private  corporations  prevents  mobility  of  labor.  The  laborer 
must  stay  with  his  one  company  continuously  for  from  fifteen  to 
forty  years  in  order  to  get  his  insurance;  he  must  stay  with  his 
company  no  matter  if  labor  is  little  needed  there  and  great  indus- 
tries are  crippled  for  lack  of  labor  elsewhere;  if  the  laborer  is  dis- 
charged or  quits  he  loses  his  old-age  pension  forever;  he  is  tied 
to  the  one  company,  regardless  of  sanitary  conditions,  regardless 
of  the  kind  of  work  to  which  he  may  be  shifted ;  he  becomes  a  kind 
of  chattel  of  the  company,  especially  during  his  declining  years, 
because  if  he  leaves  their  service  he  can  never  hope  for  an  old-age 
pension.  In  brief,  insurance  or  pensions  for  a^ed  emplovees  by 
private  corporations  would  tend  to  reduce  free  American  laborers 
to  the  position  of  the  serfs  of  the  Middle  A,ges.  Old-age  pensions 
by  private  corporations  adds  to  the  profits  of  the  corporations,  but 
from  a  social  standpoint  this  plan  is  a  bitter  failure. 

Free  Government  Pensions  is  the  second  plan.  In  this  country 
we  know  what  a  pension  system  means;  it  means  freelv  voting 
money  out  of  the  government  treasury  into  the  individual  pocket. 
To  relieve  old-age  dependency  we  would  have  to  give  a  free  pension 
to  every  needy  and  deserving  old  person  of  the  nation.  Our  oppo- 
nents can  not  defend  such  a  system  for  this  country  because  the  cost 
would  be  prohibitive,  and  because  our  experience  with  military  pen- 


Compulsory  Old  Age  Insurance  17 

sions  shows,  to  speak  plainly,,  that  many  congressmen  buy  vote 
with  pension  money.  Fifty  years  removed  from  any  serious  war, 
we  are  spending  more  than  $158,000,000  a  year  in  pensioning 
mostly  "old  soldiers"  who  never  .smelled  gunpowder.  Why? 
Because  they  vote  for  the  man  who  will  vote  them  the  money. 
Xow,  adopt  the  universal  policy  of  voting  monev  out  of  the  gov- 
ernment treasury  into  the  individual  pockets  of  all  aged  persons, 
and  there  is  before  each  politician  and  each  party  the  constant 
temptation  to  attract  votes  by  offering  larger  pensions  to  each  per- 
son, and  by  lowering  the  age  limit  offering  free  pensions  to  larger 
numbers  of  people.  The  fact  that  many  congressmen  do  not  vote 
against  excessive  military  pensions  when  only  the  old  soldier  vote 
is  involved  shows  the  danger  of  beginning  the  universal  pension 
policy  involving  all  voters.  Our  opponents  will  not  defend  such  a 
system  unless,like  drowning  men,  they  catch  at  a  straw.  Our  plan 
of  insurance  guards  against  this  danger  by  making  each  person 
help  to  pay  through  early  life  for  the  annuity  he  is  to  get  in  old 
age;  thus  there  is  no  temptation  to  the  laborer  to  vote  for  a  larger 
annuity  that  he  needs  for  his  own  protection,  because  he  himself 
has  to  help  pay  for  it  during  long  years  before  he  can  expect  the 
benefits.  England  tried  the  old-age  pension  system  for  four  years 
and  gave  it  up  to  adopt  our  plan  of  compulsory  insurance.  The 
free  old-age  pension  system  is  a  failure. 

For  relieving  old-age  poverty,  only  one  other  plan  has  been  tried 
in  the  history  of  civilization.  The  third  plan  is  that  of  voluntary 
rather  than  compulsory  old-age  insurance  by  the  government: 
offer  old-age  insurance  to  all,  just  as  under  our  plan,  but  do  not 
require  the  laborer  to  take  advantage  of  it;  let  him  take  advantage 
of  it  voluntarily.  This  plan  looks  so  good  on  its  face  that  every 
nation  has  tried  it  first,  but  each  nation  has  in  time  abandoned  the 
voluntary  plan  to  accept  our  compulsory  plan.  The  reason  is  clear. 

Under  the  leadership  of  Gladstone,  England  adopted  the  plan 
of  voluntary  old-age  insurance  by  the  government  in  1864.  Prac- 
tically no  one  took  advantage  of  it.  In  1872  an  expert  committee 
was  appointed  to  revise  the  plan,  another  expert  committee  again 
revised  the  plan  in  1892.  England  tried  every  variety  of  volun- 
tary old-age  insurance,  and  in  all  the  forty  years  literally  did  not 
write  as  much  insurance  as  the  London  Prudential  writes  in  ten 
days.  France  and  Denmark  had  the  same  experience,  and  dropped 
voluntary  old-age  insurance  to  accept  our  plan  of  compulsory  insur- 
ance. 

Massachusetts  has  recently  inaugurated  the  voluntary  insurance 


18  University  of  Texas  Debates 

system  a.nd  has  issued  only  fifty-six  old-age  policies.  Wisconsin 
adopted  the  voluntary  system  and,  at  the  last  report  I  could  get, 
so  few  applications  for  insurance  had  come  in  that  their  bureau  had 
not  even  begun  to  issue  policies.  Canada  tried  the  voluntary  plan, 
sent  broadcast  over  the  Dominion  their  advertisement  bulletin 
on  "Comfort  in  Old  Age."  Canada  has  issued  two  hundred  and 
forty-four  policies.  Voluntary  old-age  insurance  is  a  failure. 

The  system  of  pensions  by  private  corporations  is  a  failure;  the 
system  of  free  government  pensions  is  a  failure ;  the  system  of  vol- 
untary old-age  insurance  is  a  failure. 

On  the  other  hand,  our  plan  of  Compulsorv  Old-A^e  Insurance 
is  succeeding  in  every  great  civilized  country  in  the  world  except 
our  own.  Germany  adopted  it  in  1889.  Everv  laborer  whose 
income  was  below  $476  was  required  to  take  out  old  age  insurance, 
the  cost  being  divided  between  the  laborer,  the  employer,  and  the 
government.  This  was  the  experiment  of  1889 ;  if  it  had  been  a 
failure,  the  whole  scheme  would  have  been  repealed  long  ago;  if 
it  had  been  only  a  moderate  success  it  might  merelv  have  been  con- 
tinued, in  operation  without  extending  its  SCOT>P  •  but  the  nlan  of 
compulsorv  old-aere  insurance  has  proven  so  universallv  satisfactory 
that  it  has  been  constantly  extended.  Tn  1899  it  included  all  labor- 
ers whose  incomes  are  $1250  a  year,  almost  three  times  as  much  as 
it  was  at  first. 

The  plan  we  propose  is  succeeding  in  Germany.  No  political 
party  in  Germany,  no  great  economist  or  sociologist  in  Germany 
now  advocates  the  repeal  of  the  law.  Their  management  is  so 
efficient  that  it  costs  only  ?'J  per  cent  for  litigation ;  the  remaining 
91-J-  per  cent  goes  directly  to  the  benefit  of  the  insured. 

Dr.  Paul  Kaufman,  President  of  the  German  Imperial  Insurance 
Department,  says:  "The  successful  handling  of  the  labor  prob- 
lem by  means  of  social  insurance  is  one  of  the  strongest  factor? 
in  Germany's  constantly  growing  industrial  progress."  Dr 
Spieckler  says:  "We  have  secured  higher  efficiency  in  our  industries 
due  to  the  increased  worker's  efficiency,  all  brought  about  by  reliev- 
ing our  workers  from  worry  and  distress"  for  .the  future. 

Under  this  plan  for  increasing  the  efficiency  of  their  laborers 
Germany  has  advanced  from  fourth  to  second  place  in  the  world's 
trade;  the  property  of  her  people  has  doubled  in  value;  there  are 
18.000,000  savings  banks'  accounts;  wages  have  risen  on  the  average 
for  unskilled  workmen  about  twenty-five  per  cent,  for  skilled  work- 
men about  fifty  per  cent,  and  in  certain  trades  even  one  hundred 
per  cent;  there  are  fewer  unemployed  in  Germany  than  in  any 


Compulsory  Old  Age  Insurance  19 

other  nation  in  the  world;  the  death  rate  has  considerably  dimin- 
ished; the  length  of  life  has  risen  from  38'.1  years  to  48.8  .years. 
Germany  is  satisfied  with  the  plan  we  propose. 

These  facts  impressed  England  so  strongly  that  the  Trades  Con- 
gress of  Great  Britain  sent  a  commission  to  study  the  German 
situation.  This  commission  officially  reported  back  that  there 
were  literally  no  slums  in  Germany.  Then  England  adopted  a 
compulsory  old-age  insurance  system.  The  law  went  into  effect 
on  July  13,  1912.  England's  method  of  administration  is  simple 
and  efficient.  Each  laborer  is  given  an  insurance  card;  at  the 
end  of  the  week  he  carries  this  card  to  his  employer  who  affixes 
to  it  an  8  cent  insurance  stamp;  the  laborer  then  carries  this  card 
to  the  postoffice,  gets  his  credit,  and  the  postmaster  forwards  the 
card  to  the  Central  Bureau. 

England,  after  studying  and  experimenting  with  every  known 
system  for  relieving  old-age  poverty,  at  last  adopted  the  plan  of 
compulsory  old-age  insurance  which  we  of  the  affirmative  offer 
to-night.  The  Liberal  party  in  England  passed  their  compulsory 
old-age  insurance  law;  the  conservative  party  no  longer  declares 
against  it;  the  Labor  Party  through  its  leader,  Mr.  Eamsey  Mac- 
Donald,  has  officially -declared  in  favor  of  it.  England  is  satisfied 
with  the  plan  we  propose. 

France  began  experimenting  in  1850,  and  by  1910  reached  the 
goal  at  which  all  nations  ultimately  arrive — Compulsory  Old-Age 
Insurance.  All  whose  incomes  are  $600  a  year  or  less  are 
required  to  insure,  the  government  paying  a  liberal  part  of  the 
cost.  The  French  system  has  one  especially  noteworthy  provision 
for  encouraging  thrift.  The  laborer  may  contribute  a  larger  pre- 
mium than  is  required,  and  so  by  his  own  foresight  and  saving  pro- 
vide for  himself  a  larger  annuity  on  reaching  the  pension  period. 
France  is  satisfied  with  the  plan  we  propose. 

Without  going  into  the  detailed  system  of  other  countries,  it 
is  sufficient  to  say  that  the  experts  of  all  European  nations  assem- 
bled at  Rome  in  1908  and  again  at  The  Hague  in  1910,  and  both 
conferences  declared  officially  that  compulsory  insurance  was  the 
best  and  most  efficient  means  of  solving  the  problem  of  old-age 
dependency. 

Germany  says  compulsory  old-age  insurance  is  a  good  thing: 
our  opponents  tell  Germany  that  she  is  mistaken,  that  the  system 
is  bad.  Denmark  says  compulsory  old-age  insurance  is  good;  our 
opponents  say  it  is  bad.  France  says  old-age  insurance  is  good; 
our  opponents  still  insist  it  is  bad.  England  affirms  that  compul- 
sory old-age  insurance  is  good;  our  opponents — waxed  mighty  in 


20  University  of  Texas  Delates 

stature  and  wisdom — deny  it.  The  experts  of  all  of  the  nations  in 
Europe  in  conference  twice  •  declare  that  the  combined  experience 
of  their  .nations  has  shown  that  compulsory  old-age  insurance  is 
the  best  solution  of  the  problem. 

Our  opponents  can  escape  this  overwhelming  testimony  only  bv 
saying  that  their  theories  overturn  all  of  the  facts  of  Europe ;  that 
in  the  interpretation  of  these  facts  they  themselves  are  wiser  than 
the  World's  congress  of  experts!  That  would  be  mighty  hard 
on  these  experts,  but  I  guess  they  could  stand  it. 

Our  affirmative  case  rests  upon  this  rock:  I  have  shown  that 
every  other  plan  that  has  ever  been  tried  has  failed;  the  nations 
one  by  one  have  abandoned  them  to  take  up  our  plan ;  our  svstem 
.  has  never  failed  anywhere ;  no  nation  having  ever  adopted  old-age 
insurance  has  ever  abandoned  the  policy,  but  on  the  other  hand  each 
has  constantly  extended  the  scope  of  its  operations;  my  colleague 
has  shown  that  our  plan  can  be  adopted  in  the  United  States  and 
will  care  for  old-age  dependents  without  adding  one  penny  to  the 
annual  $220.000.000  we  are  at  present  spending  ineffectively  for  the 
purpose,  because  our  plan  will  substitute  a  system  for  present 
unorganized  wastefulness. 

Every  other  plan  has  failed ;  our  plan  has  alwavs  succeeded ;  hence 
our  opponents  are  driven  either  to  accept  our  proposed  commileory 
old-age  insurance  or  to  defend  the  barbaric  policy  of  making  no 
provision  whatever  for  old-age  poverty.  Dr.  Eeinhart,  a  mission- 
ary, discovered  one  wild  heathen  tribe  in  the  far  interior  of  Thibet 
whose  custom  it  was  to  drive  their  useless  aged  from  the  tents  to 
the  wilderness  to  starve.  Are  the  gentlemen  on  the  negative  will- 
ing to  say  that  society  in  America  should  be  allowed  to  cast  off  its 
aged  poor  to  starve  ? 

Honorable  Judges,  upon  this  Gibraltar  we  rest  our  case:  every 
other  plan  has  failed ;  our  plan  of  Compulsory  Old-A^e  Insurance 
has  always  succeeded,  and  it  can  be  adopted  in  this  country  with  no 
additional  cost, 

SECOND  NEGATIVE  SPEECH. 

BY   CHARLES   I.   FRANCIS,   OF  DENTON,   TEXAS. 

Mr.  Chairman,  Ladies  and  Gentlemen: 

My  colleague  has  shown  that  the  adoption  of  a  compulsory  old- 
age  insurance  law  by  the  Federal  government  is  unnecessary  and 
inexpedient;  unnecessary,  in  that  there  are  now  at  work  on  the 


Compulsory  Old  Age  Insurance  21 

problem  certain  gigantic  forces  which  will  in  the  "end  effect  _a  . 
desirable  solution;  inexpedient,  in  that  'our  varied  economic 
resources  and  peculiar  Federal  form  of  government  preclude  an 
effective  administration  of  the  system.  He  has  pointed  out  that 
the  inherent  complexity  of  the  proposed  measure  will  destroy  what- 
ever benefits  might  theoretically  be  expected  to  result  from  the 
adoption  of  the  plan;  and  he  has  shown  that  a  compulsory  insur- 
ance law  is  unsuited  to  the  individualistic  sentiments  and  ideals 
of  the  American  people. 

The  opposition  in  their  constructive  argument  have  said  that 
old-age  poverty  is  due  fundamentally  to  our  unfair  industrial  sys- 
tem, together  with  the  naturally  improvident  character  of  the 
average  workman,  and  that  the  only  way  that  this  condition  can  be 
remedied  is  through  the  agency  of  a  compulsory  old-age  insurance 
law.  Gentlemen,  we  are  constrained  to  take  issue  with  the  affirma- 
tive in  the  very  premise  upon  which  their  entire  argument  is 
founded.  If  the  average  workman  is  improvident  of  the  future, 
can  compulsion  remedy  this  defect  of  character  ?  Just  as  the  mus- 
cles of  the  body  are  not  strengthened  but  rather  weakened  bv  inac- 
tivity and  idleness,  so  are  self-reliance  and  independence  taught 
only  by  the  exercise  of  these  qualities.  We  are,  therefore,  unable  to 
discern  how  governmental  paternalism  can  ever  instill  these  quali- 
ties in  the  American  laborer,  of  the  lack  of  which  the  affirmative 
complain.  NOT  can  we  understand  how  in  the  face  of  modern 
investigation  and  research,  the  opposition  can  contend  that  poverty 
is  due  to  the  unfairness  of  our  economic  system.  We  contend  that 
it  is  due  primarily  to  social  and  not  to  economic  causes. 
To  illustrate  my  meaning:  Prof.  Divine  of  Columbia  University 
says,  <rWe  have  too  long  been  paying  for  the  effects  of  our  social 
diseases  without  trying  to  remedy  their  causes,  and  the  social  condi- 
tions of  the  American  people  demand  that  we  must  remedy  these 
causes  instead  of  year  by  year  paying  for  our  industrial  defects." 
Germany  has  instituted  an  old-age  insurance  plan,  and  yet  accord- 
ing to  the  statement  of  Dr.  Friedenburg,  former  President  of  the 
Imperial  Insurance  Commission,  and  according  to  Henrv  W.  Far- 
num  and  Dr.  Emil  Munsterburg,  leading  European  authorities, 
poverty  has  increased  at  a  remarkable  rate  since  the  inauguration 
of  the  plan.  Our  own  country  has  had  no  such  Federal  insurance 
plan,  yet  according  to  our  census  reports,  poverty  decreased,  during 
the  period  from  1890  to  1903,  15.1  persons  for  every  100,000,  and 
during  the  period  from  1903  to  1910  it  decreased  to  8.8  persons 
per  100,000;  during  the  past  thirty-three  years  it  has  decreased 
30.6  persons  per  100,000  of  population;  an  increase  in  poverty 


22  University  of  Texas  Debates 

under  a  compulsory  insurance  system  in  Germany  and  a  decrease 
in  poverty  in  this  country  where  no  such  system  exists.  Germany 
has  tried  to  solve  the  problem  by  a  spurious  law  of  compulsory 
insurance;  it  has  pursued  the  policy  of  paying  year  by  year 
for  its  industrial  defects.  Our  country  has  in  a  small  way 
pursued  the  policy  of  removing  the  causes  which  give  rise  to 
poverty.  The  German  plan  has  failed.  Our  own  plan  has  suc- 
ceeded in  a  measure.  Then  which,  ladies  and  gentlemen, 
should  be  the  future  policy  of  our  county?  Furthermore,  ac- 
cording to  the  statement  of  Dr.  Friedenburg  and  Herr  Zahns, 
Germany  expends  more  today  in  proportion  to  its  population  on 
charity  and  out-door  relief  than  it  did  before  the  inauguration  of 
the  Federal  Insurance  System.  Herr  Zahns,  a  leading  German 
authority  formerly  connected  with  the  administration  of  the  insur- 
ance law,  after  a  research  covering  the  years  1909-1910,  has  pub- 
lished the  following  statement:  "In  reality  the  poor  expenditure 
both  as  regards  the  number  of  beneficiaries  and  as  regards  the 
number  of  individual  allowances,  has  almost  everywhere  increased." 
Dr.  Friedenburg  further  says :  "As  to  the  promise  to  kill  pauper- 
ism, it  is  remarkable  how  little  of  that  promise  is  heard  to-day." 
Germany  thus  bears  a  double  burden — the  burden  of  charity, 
administered  by  poor  relief  societies  and  charitable  organizations, 
and  the  burden  of  Federal  insurance,  paid  in  a  large  part  by  the 
laboring  classes  who  are  least  able  to  bear  the  burden.  In  this 
country,  we  have  but  one  burden — the  burden  of  charity — which 
is  paid  by  that  portion  of  society  which  is  financially  able  to  make 
such  a  contribution.  Year  by  year,  according  to  the  United  States 
census  reports,  this  burden  of  our  country  is  decreasing,  while  both 
the  burden  of  insurance  and  the  burden  of  charity  are  increasing 
in  the  German  Empire. 

Modern  society  is  confronted  with  the  great  problem  of  the 
•?ocial  evil.  Shall  we  allow  the  conditions  producing  this  evil  to 
.continue,  and  seek  to  make  amends  to  the  victims  by  a  money  pay- 
ment? Yet,  speaking  comparatively,  this  is  what  the  opposition 
proposes;  this  is  what  the  above  statistics  show  that  Germany  has 
done, — merely  continued  that  social  system  which  produces  the 
abnormal  condition  of  poverty,  and  hence  has  failed  to  find  a  rem- 
edy for  the  causes  of  its  social  disease.  The  result  has  been 
additional  burden  of  insurance  plus  the  increasing  burden  of 
charity. 

An  analysis  of  the  debate  up  to  this  point,  shows  the  following 
status:  The  affirmative  says  (forgetting  the  experience  of  Ger- 


Compulsory  Old  Age  Insurance  23 

many),  "Our  industrial  system  is  wrong;  it  produces  old-age — 
poverty;  remedy  it  by  each  year  paying  the  price  of  your  negli- 
gence and  incompetence."  The  negative  says:  "Poverty  is  due 
primarily  to  social  conditions;  remedy  the  evil  by  eradication  of 
the  fundamental  causes."  The  affirmative  says :  "The  American 
laborer  is  incompetent  and  incapable;  hence  compulsion  is  neces- 
sary." The  negative  says :  "The  incompetence  and  incapacity  of 
the  American  laborer  is  not  inherent,  as  the  British  investigation 
committee  said,  but  due  to  disease,  lack  of  education,  mental  and 
physical  inabilities;  and  the  paths  of  reform  must  follow  the  lines 
of  industrial  education ;  the  passage  of  fundamental  social  laws  for 
the  able,  such  as  Workmen^  Compensation,  Minimum  Wage,  and 
Child  Labor  Laws ;  and  finally,  scientific  and  organized  charity  • 
must  provide  for  that  portion  of  society  which  has  become  depend- 
ent upon  the  state." 

But  passing  by  the  experience  of  Germany,  and  disregarding  the 
opinions  of  our  leading  economists  voiced  by  the  President  of 
Wisconsin  "[University  when  he  said :  "Did  we  but  apply  the  agen- 
cies which  we  have  at  hand,  we  would  solve  within  two  genera- 
tions the  great  social  problems  that  confront  our  nation."  let  UB  pre- 
sume that  the  American  people  desire  this  compulsory  insurance 
law  even  though  it  does  not  reach  the  fundamental  causes  of  pov- 
erty. What  difficulties  would  we  encounter  in  the  practical  admin- 
istration of  the  law? 

Society  would  be  divided  into  two  great  classes:  those  com- 
pelled by  law  to  provide  for  old  age  through  a  system  of  insurance ; 
and  those  who  are  exempt  from  such  provision,  inasmuch  as  their 
wages  exceed  the  minimum  required  by  the  government.  Statis- 
tics will  hardly  warrant  such  a  division,  for  proportionately  just 
as  many  lawyers,  just  as  many  ministers,  just  as  many  merchants 
become  paupers  as  industrial  laborers.  So  any  system  of  compul- 
sory insurance  must  fail  in  its  purpose  of  preventing  old-age  pau- 
perism among  the  uninsured  classes,  and  such  classes  in  this  coun- 
try would  amount  to  more  than  65  per  cent  of  the  entire  population. 
But  the  classes  subject  to  such  a  law — mind  you,  representing  but 
35  per  cent  of  our  population — may  also  be  diivded  into  two  classes : 
(1)  Our  industrial  classes  representing  those  whose  employment 
is  steady  and  whose  incomes  are  fairly  regular,  and  (2)  the  great 
army  of  the  irregularly  employed  whose  wages  constantly  vary 
from  month  to  month,  such  as  carpenters,  masons,  contract  work- 
ers, agricultural  laborers,  seamstresses,  house-servants,  wash- 
women, and  so  forth. 


24  University  of  Texas  Debates 

The  former  class,  our  industrial  laborers,  according  to  the  United 
States  census,  represents  24  per  cent  of  the  laboring  classes;  the 
latter  class,  those  irregularly  employed,  represents  approximately 
76  per  cent.  In  the  case  of  the  24  per  cent,  a  system  of  compulsory 
insurance  might  be  administered  by  compelling  the  employer  to 
deduct  from  the  salary  of  the  employe  the  amount  of  the  weekly 
assessment.  But  in  the  case  of  76  per  cent  of  the  wage  earners, 
the  irregularly  employed,  no  assessment  could  be  made  by  the 
stoppage-at-the-source  plan,  for  their  wages  are  uncertain,  varying 
from  month  to  month,  and  the  wage-earner  has  no  certain  employer 
for  any  considerable  length  of  time.  So  any  system  of  compul- 
sory insurance  must  fail  in  its  purpose  of  preventing  old-age  pau- 
perism in  the  great  army  of  the  irregularly  employed,  and  it  is 
from  the  latter  class,  as  Frederick  I.  Hoffman  says,  "that  the 
majority  of  old-age  dependent  paupers  come."  Now,  of  this  indus- 
trial class  representing  but  24  per  cent  of  our  wage  earners  (not 
of  our  population,  mind  you),  what  proportion  will  ever  reap  the 
benefit  of  an  insurance  policy?  Reliable  statistics,  found  in  the 
1910  census  reports,  shows  that  only  one  man  out  of  every  twenty- 
five  reaches  the  age  of  65  years,  the  lowest  age  at  which  a  paid-up 
policy  could  possibly  be  granted.  Then  of  the  24  per  cent  of  the 
laboring  class,  who  have  a  potential  possibility  of  receiving  a  paid- 
up  policy,  only  one  out  of  every  twenty-five  will  reach  the  minimum 
age  limit.  The  other  twenty-four  will  pay  for  the  one,  and  will 
realize  no  benefit  whatever  from  the  thousands  of  assessments  which 
they  have  been  forced  to  pay  to  the  Federal  government.  Gen- 
tlemen of  the  affirmative,  is  this  the  'equitable  system  for  which  you 
plead  ?  Do  you  mean  to  say  that  you  will  attempt  to  assess  the 
salaries  of  twenty-five  million  laborers  for  the  benefit  of  such  a 
small  per  cent  of  our  population?  When  of  this  small,  per  cent 
three  out  of  ever  four  are  independent  of  all  forms  of  charity? 
You  propose  to  institute  a  gigantic  system  of  insurance  in  order  to 
remedy  old-age  poverty,  when  such  a  system  could  not  possibly 
benefit  more  than  one-half  of  1  per  cent  of  our  population.  Then 
it  is  unreasonable  to  suppose  that  the  system  will  succeed  in  its 
primary  purpose. 

To  summarize  my  second  point:  Our  government  under  the 
proposed  plan  will  purpose  to  reach  but  35  per  cent  of  our  popula- 
tion, the  other  65  per  cent  being  exempt;  of  this  35  per  cent  only 
the  industrial  class,  amounting  to  but  24  per  cent  of  the  wage  earn- 
ers, can  be  reached,  as  the  other  76  per  cent  are  irregularly  em- 
ployed; of  the  24  per  cent  only  one  out  of  every  twenty-five  will 


Compulsory  Old  Age,  Insurance  25 

ever  receive  any  return  on  his  investment,  and  to  those  whom  aid 
is  given,  a  large  majority  will  have  no  need  for  such  aid.  We  con- 
tend that  the  results  do  not  justify  the  means. 

My  colleague  has  discussed  the  great  complexity  attendant  upon 
the  administration  of  a  Federal  Insurance  System;  in  Germany 
so  complex  and  intricate  has  it  become  that  practically  everv  bene- 
fit expected  by  its  supporters  has  failed  to  materialize.  Join  to 
the  inherent  complexity  of  the  scheme  the  fact  that  it  fails 'to  reach 
the  fundamental  causes  of  poverty,  and  benefits  only  such  a  small 
per  cent  of  our  population,  and  it  will  readily  be  seen  that  the 
system  is  impracticable  in  administration. 

In  1884  Bismarck,  Chancellor  of  the  German  Empire,  when 
asked  his  reason  for  proposing  and  supporting  a  social  insurance 
policy,  said :  "Because  it  will  be  an  inoculation  against  socialism, 
the  power  of  which,  although  detrimental  to  the  empire,  is  steadily 
increasing."  When  Bismarck  made  that  statement  the  influence 
of  the  Social  Democrats  in  governmental  affairs  was  practically 
negligible;  in  1872  they  cast  a  vote  of  125,000.  In  the  election  of 
1912  their  candidates  received  a  plurality  of  3,000,000  votes,  the 
Socialist  vote  amounting  to  7,500,000  out  of  a  total  vote  of  approxi- 
mately 12,000,000.  The  platform  of  the  party  is  "the  destruction 
of  capitalism,  and  the  inauguration  of  a  state  monopoly  of  the 
production  and  distribution  of  goods." 

Social  insurance  but  added  fuel  to  the  flames  of  Socialistic  ideas ; 
the  lines  of  class  cleavage  have  become  clearly  more  marked;  and 
the  people  clamor  for  a  greater  degree  of  protection  from  the  state. 
Politically  America,  knows  no  servile  class;  if  it  is  ever  created 
through  a  system  of  compulsory  insurance,  we  will  have  no  Bun- 
desrath  as  in  Germany,  to  defeat  the  will  of  the  popular  assembly. 
To  illustrate:  To-day  in  the  United  States  no  political  party 
dares  to  favor  a  reduction  of  the  pension  system,  and  as  a  conse- 
quence, though  fifty  years  removed  from  any  serious  war,  we  have 
a  pension  list  the  largest  in  the  history  of  our  country,  and  con- 
stantly increasing  through  popular  demand.  Just  so  under  an 
insurance  system,  in  order  to  curry  popular  favor,  our  parties  would 
be  forced  to  favor  an  increase  in  the  assessments  against  employers, 
a  lowering  of  the  age  limit,  and  more  extended  privileges  to  the 
masses.  We  of  the  negative  hesitate  to  favor  the  adoption  of  a 
system  which  experience  shows  will  become  entangled  in  politics, 
where  fraud  and  corruption  will  creep  in,  and  by  which  the  dema- 
gogues may  appeal  to  the  feelings  and  interests  of  the  insured. 

Whereas  my  colleague  has  shown  that  the  proposed  measure  is 


26  University  of  Texas  Debates 

unnecessary  and  inexpedient,  that  it  is  inherently  complex  and 
incompatible  with  American  sentiments,,  institutions  and  ideals,  it 
has  been  my  purpose  to  prove  that  the  law  does  not  reach  the  funda- 
mental causes  of  poverty ;  that  whatever  benefits  might  theoreticallv 
be  expected  from  the  system,  the  practical  results  do  not  justify 
the  measure  in  that  such  a  few  would  reap  the  benefit  of  the  law,  for 
it  does  not  include  within  its  scope  the  welfare  of  the  uninsured 
classes,  amounting  to  65  per  cent  of  our  population;  it  does  not 
include  the  great  army  of  the  irregularly  unemployed,  amounting  to 
76  per  cent  of  the  wage-earners,  and  it  will  be  of  no  benefit  to  those 
who  do  not  attain  the  minimum  age  limit;  joined  to  these  defect? 
is  the  fact  that  complexity  arising  from  the  administration  of  the 
law  would  be  seriously  detrimental  to,  and  perhaps  destructive  of, 
the  efficiency  of  the  scheme:  that  the  system  would  become  entan- 
gled in  political  alliances,  would  encourage  class  hatred,  and  fos- 
ter the  tenets  of  Socialism.  For  these  reasons  we  ask  the  rejection 
of  a  compulsory  system  of  old-age  insurance  administered  uniformly 
by  the  Federal  Government. 

BIBLIOGRAPHY. 

BOOKS  AND  PAMPHLETS. 

Australia.  Attorney  General.  Old  Age  Pensions.  Published 
for  the  Government  of  Australia  by  J.  Kemp,  1908. 

Adams  and  Sumner,  Labor  Problems. 

Boyd's  Compilation  of  Insurance  Laws,  1912. 

Canada.  Parliament,  1906-1907.  Senate  Old  Age  Annuities. 
Ottawa,  Govt.  Printing  Bureau,  1907. 

Devine,  Edwin  T.     Misery  and  Its  Causes. 

Dryden,  John  F.  A  Method  of  Providing  With  Certainty  for 
Dependent  Old  Age.  American  Underwriter,  19'08. 

Dr.  Friedenburg^s  Criticism  of  German  System  of  Social  Insur- 
ance. 

Eberfield,  System  of  Charity.     German  Government  document. 

Frederick  A.  Ogg.  The  Governments  of  Europe.  The  Macmil- 
lan  Co.,  1913.  Social  Progress  in  Contemporary  Europe.  Gives 
status  of  insurance  in  various  European  countries. 

Henderson,  Charles  R.  Introduction  to  studv  of  dependent,  de- 
fective, and  delinquent  classes  and  of  their  social  treatment.  Bos- 
ton, D.  C.  Heath  &  Co. 

Henderson,  Charles  R.  Modern  Methods  of  Charity.  The  Mac- 
millan  Co.  The  Social  S<pirit  in  America. 


Compulsory  Old  Age  Insurance  27 

.Hoffman,,  Frederick  L.  Paper  read  before  Board  of  United. 
Charities.  In  Eeport  of  United  Charities  Association,  1908. 
Also  American  Journal  of  Sociology,  September,  1908,  Social  In- 
surance. 

Investigation  of  Imperial  Insurance  Commission  of  New  South 
Wales.  Government  Document  of  New  South  Wales. 

Great  Britain,  Laws,  Statutes,  Etc.,  1912.  Insurance  Act,  by 
William  A.  Casson.  London.  C.  Knight  &  Co.,  1908. 

Massachusetts  Commission  on  Old  Age  Pensions.  Report.  1907. 
Boston,  1907.  500  pp. 

Missouri  University  Bulletin  by  Dr.  Charles  Ellwood.  Alms- 
house  Statistics. 

Murray,  London  J.  The  Manufacturer  of  Paupers :  a  Protest 
and  a  Policy.  1906. 

Nearing.  Scott.     Social  Adjustment. 

Proceedings  of  National  Conference  of  Charities  and  Correction. 
Papers  by  C.  E.  Henderson,  E.  A.  Vanderlip,  Frank  A.  Fetter. 

Report  of  British  Investigation  Committee.  British  Govern- 
ment. 

Report  of  Imperial  Insurance  Commission  of  Germany.  Govern- 
ment Document  of  German  Empire. 

Report  of  Massachusetts  Investigating  Committee.  Bureau  of 
Statistics  of  Massachusetts. 

Seager,  Social  Insurance.  A  Program  of  Social  Reofrm.  The 
Macmillan  Co.,  1910. 

Squier,  Lee  Welling.  Old  Age  Dependency  in  the  United  States, 
The  Macmillan  Co.,  1912. 

United  States  Census  Reports  for  1900  and  1910. 

Workmen's  Insurance  and  Compensation  Svstems  in  Europe. 
Annual  Report  of  U.  S.  Commissioner  of  Labor,  1909.  Govern- 
ment Printing  Office,  Washington. 

PERIODICALS. 

Affirmative  References. 

Amer.  Jour.  Soc.,  vol.  17,  177-87.  Atlantic  Mo.,  vol.  108,  p. 
105.  Econ.  Jour.,  vol.  9,  pp.  520-40.  Independent,  vol.  61,  pp. 
705-6;  vol.  64,  pp.  1103-4;  vol.  65,  p.  175.  Contemp.  Rev.,  vol.  93, 
pp.  94-107.  Scribner^s  Mag.,  vol.  37,  pp.  454-67.  Survey,  Janu- 
ary 20,  1912,  p.  1622.  World's  Work,  vol.  3,  p.  2019.  Rev.  of 
R's,  vol.  27,  pp.  84-5.  Harper's  Mag.,  vol.  119,  pp.  727-34.  Fortn. 


28  University  of  Texas  Delates 

Rev.,  Jan.  20,  1912,  pp.  40-59.     Forum,  vol.  40,  pp.  569-76.     19th 
Century,  vol.  69,  pp.  1141-56.     Pol.  Sci.  Q.,  vol.  26,  p.  500. 

Negative  References. 

Rev.  of  R's,  vol.  38,  p.  746.  Arena,  vol.  23,  pp.  635-46.  Forum, 
vol.  28,  pp.  287-700;  vol.  68,  p.  187.  Nation,  vol.  69,  p.  146;  vol. 
82,  p.  96.  19th  Century,  vol.  30,  p.  380 ;  vol.  4-5,  p.  681 ;  vol.  68,  pp. 
957-74.  No.  Airier.  Rev.,  Jan.  1912,  pp.  108-19.  Westin.  Rev., 
vol.  176,  pp.  209-14.  Atlantic  Mo.,  vol.  108,  pp.  105-9.  Econ. 
Rev.;  July,  1892.  Blackwood's  Magazine,  Jan.,  1912,  pp.  147-54, 
Outlook,  vol.  30,  p.  1911. 


Banking  and  Currency  Reform  29 


BANKING  AND  CURRENCY  REFORM. 


FIRST  AFFIRMATIVE  SPEECH. 

BY    THEODOKE    A.    GATCHELL,    OF    AUSTIN,    TEXAS. 

Ladies  and  Gentlemen: 

The  subject  under  discussion  this  evening  is,  Resolved,  That  tJie 
Plan  for  a  National  Reserve  Association  as  Proposed  by  the  U.  S. 
Monetary  Commission  Offers  a  Desirable  Remedy  for  the  Defects 
of  Our  Present  Banking  and  Currency  Systems. 

Our  present  monetary  system  arose  at  the  time  of  the  Civil  War, 
and  it  was  formed  for  the  purpose  of  furnishing  a  market  for 
U.  S.  Bonds  on  which  the  war  was  financed,  and  to  secure  a  safe 
currency  system.  But  as  President  Wilson  points  out,  in  endeavor- 
ing to  secure  safety  we  sacrifice  flexibility,  so  that  to-day  we  have 
neither  the  one  nor  the  other.  To-day,,  therefore,  we  have  simply 
a  bond-secured  currency  as  contradistinguished  from  asset  currency, 
with  the  result  that  the  amount  of  bank  notes  in  circulation  is  not 
based  on  the  business  demands  but  solely  upon  the  amount  of  bonds 
which  are  issued.  For  example,  if  the  Panama  Canal  is  to  be 
built,  we  must  necessarily  have  an  extra  amount  of  bonds,  and 
therefore  in  addition  an  entirely  superfluous  issuance  of  bank  notes. 
Is  it  within  reason  to  suppose  that  if  a  lock  canal  costs  fifty  million? 
more  than  a  sea  level  canal,  we  should  have  fifty  million  dollar? 
additional  of  bank  notes  in  circulation?  So,  the  changes  in  the 
price  of  bonds  and  not  the  business  demands,  is  the  sole  factor 
which  determines  the  amount  of  notes  in  circulation  to-dav  under 
our  present  currencv  system. 

The  most  vital  defects  of  the  system,  therefore,  may  be  enum- 
erated as  follows:  first,  the  inelasticity  of  currency;  second,  the 
lack  of  cooperation  between  banks;  and,  third,  the  financing  of  our 
exports  by  foreign  bankers  alone.  As  a  result  of  these  evils  we 
see  constant  expansion  in  our  bank  notes,  with  no  corresponding 
contraction,  which  results  in  inflation  and  a  panic  every  few  years. 
We  see  an  annual  money  deficiencv  at  the  crop-moving  season. 
Farmers  have  to  pay  eight  per  cent  for  loans  throughout  the  coun- 
try while  Wall  Street  speculators  get  these  same  loans  for  three  per 
cent.  We  see  Texas  cotton,  exported  and  financed  by  European 


30  University  of  Texas  Debates 

bankers  simply  because  the  American  bankers  are  not  allowed  to 
deal  in  acceptances.  We  see  a  lack  of  mobilization  of  reserves,  lack 
of  credit  facilities,  lack  of  cooperation  between  banks  and  an  abso- 
lutely inelastic,  unsatisfactory  currency. 

To  remedy  these  existing  evils  the  plan  of  the  National  Eeserve 
Association  was  brought  forward.  This  plan  is  as  follows : 

There  will  be  an  organization  similar  to  our  counties,  States  and 
Nation,  represented  by  the  local  associations  which  elect  the  direc- 
tors of  the  fifteen  district  associations  into  which  the  country  is 
divided,  who  in  turn  elect  the  directors  of  the  National  Association. 
The  Governor  of  the  National  Association  and  the  two  deputies 
and  the  other  forty-three  directors  of  the  National  Association  will 
exercise  general  control  over  all  the  Association,  but  the  stockholders 
of  the  local  banks  throughout  the  countrv  hold  absolutely  in  their 
power  the  personnel  of  each  board  of  directors,  that  is,  the  sub- 
stantial business  men  in  each  community.  The  plan  contains  eight 
different  provisions: 

(1.)  To  insure  the  maintenance  of  adequate  reserves,  (2)  to 
provide  for  the  concentration  of  cash  reserves,  (3)  to  authorize 
the  rediscounting  of  commercial  paper  by  the  Association,  (4)  to 
give  to  individual  banks  the  facilities  for  an  increase  of  their 
reserves  and  loaning  power,  •  (5)  to  grant  further  note-issuing* 
power  to  the  National  Reserve  Association,  (6)  to  provide  for  a 
uniform  rate  of  discount,  (7)  to  standardize  commercial  paper,  and 
(8)  to  establish  foreign  banks. 

This  plan,  resulting  from  our  experience  in  the  past,  possess- 
ing the  best  features  of  the  European  systems,  and  revised  and 
made  suitable  for  modern  financial  demands  and  the  peculiar  and 
widely  differing  conditions  existing  in  this  country  is  the  medium 
we  offer  you  this  evening  through  which  the  present  evil  of  our 
system  may  be  cured  and  the  future  needs  of  our  Nation  be  pro- 
vided for.  The  benefits  resulting  from  the  adoption  of  this  sys- 
tem would  be  three-fold.  The  National  Reserve  Association,  first, 
will  furnish  the  means  for  cooperation  between  different  banks  and 
make  possible  concentrated  reserve;  second,  it  will  provide  means 
for.  financing  our  exports,  and,  third,  it  will  give  us  better  credit 
facilities. 

This  plan  will  furnish  a  means  for  cooperation  between  differ- 
ent banks.  The  aim  of  this  plan  is  to  establish  a  cooperative,  not 
a  centralized  banking  system.  To-day  in  panic  and  crop-moving 
times  the  banks  act  only  for  themselves  and  thereby  both  they 
and  the  public  suffer.  Under  the  proposed  National  Reserve  Asso- 


Banking  and  Currency  Reform  31 

elation  the  banks  will  be  able  to  obtain  all  the  cash  they  need  ancU 
they  will  gladly  cooperate  with  each  other.  They  will  be  able  to 
do  this  because  the  plan  (Section  28),  proposes  that  the  Associa- 
tion may  rediscount  direct  obligations  of  subscribing  banks.  Any 
bank,,  therefore,  in  times  of  panic  when  cash  is  necessary,  needs 
only  to  send  its  securities  in  the  form  of  commer.cial  paper  to  the 
Association  and  immediately  it  will  receive  the  amount  in  cash 
holdings.  Nothing  but  cooperation  can  result  when  such  a  plan  is 
in  force.  Contrast  this  state  of  affairs,  if  you  will,  to  those  existing 
under  the  present  system.  This  same  bank,  in  times  of  panic 
when  it  needs  the  cash,  may  possess  all  the  securities  in  the  world, 
but  under  the  present  law  it  could  not  negotiate  a  single  dollar's 
worth,  with  the  result,  that  not  alone  do  the  banks  suffer  but  the 
people  as  well,  and  no  cooperation  whatsoever  will  exist  between 
individual  banks.  Moreover,  all  possible  means,  such  as  trans- 
ferring bond  balances  by  telegraph,  etc.,  are  provided  in  the  plan  in 
order  to  facilitate  this  cooperation. 

This  means  an  absolute  elimination  of  exchange  charges.  The 
National  Reserve  Association  shall  at  once  upon  application,  with- 
out charge  for  transportation,  forward  its  superfluous  notes  to  any 
depositing  bank  account  to  credit  its  balance.  Once  this  coopera- 
tion is  established,  we  wil  Ibe  enabled  to  have  a  mobilization  of 
reserves  and  a  large  gold  fund  mav  be  kept  in  one  place.  This 
concentrated  gold  reserve,  always  accessible,  would  be  able  to  break 
panics  and  alleviate  conditions. 

For  instance,  the  Bank  of  England  with  a  concentrated  gold 
reserve  of  one  hundred  and  fifty  millions  in  1907,  helped  .the 
United  States  with  a  reserve  of  nine  hundred  millions  in  govern, 
mental  vaults  and  twice  that  much  scattered  throughout  twenty-five 
thousand  various  banks.  The  policy  of  every  bank  in  times  of 
panic  would  change  under  the  National  Reserve  Association.  In 
times  of  panic  under  our  present  system,  each  individual  bank 
begins  to  hoard  money  regardless  of  whether  or  not  the  panic  effects 
its  section.  Under  the  National  Reserve  Association  the  individual 
banks  would  be  enabled  to  loan  money  to  the  afflicted  ones  and  thus 
immeasurably  relieve  the  situation.  This  method  has  repeatedly 
worked  with  success. 

For  example,  on  September  23,  1907,  at  Germany's  commercial 
crisis  and  our  panic  the  cash  on  hand  of  the  Imperial  Bank  was 
$236,797,000.00;  on.  September  30  it  had  declined  to  $199,025,- 
000.00,  a  decrease  in  one  week  of  $37,772,000.00.  But,  during 
the  same  week  the  loans  and  discounts  rose  from  $289,750,000.00 


32  University  of  Texas  Debates 

to  $391,637,000.00,  an  increase  of  $101,887,000.00.  The  note 
circulation  rose  from  $339,625,000.00  to  $435,437,000.00— an  in- 
crease of  $93,812,000.00.  Thus  by  merely  increasing  the  loans 
and  note  circulation,  Germany  was  able  to  escape  the  panic  which 
the  same  year  and  the  same  month  ran  wild  over  the  United 
States,  and  in  which  our  banks  were  forced  to  decrease  the  loans 
and  increase  our  reserves. 

My  second  point.  The  National  Eeserve  Association  will  pro- 
vide means  for  financing  our  exports.  This  plan  will  enable  the 
United  States  to  finance  our  own  exports  and  thus  get  our  propor- 
tionate share  in  financing  the  products  of  the  world.  We  should 
finance  our  own  foreign  exports,  and  the  people  of  the  South  should 
be  particularly  interested  in  the  matter  of  who  exports,  who 
finances,  who  reaps  the  profit  of.  our  cotton.  To-day  our  banks  can 
not  deal  in  acceptances  because  of  ridiculous  laws,  though  they  can 
lend  on  promissory  notes  which  often  do  not  have  the  security  be- 
hind them  that  acceptances  have.  Thus  the  Texas  farmer,  when 
he  exports  his  cotton,  gives  his  bill  of  security  and  gets  his  bill  of 
acceptance,  finds  that  no  American  banker  is  able  to  deal  in  this 
acceptance,  with  the  result  that  the  deal  is  put  through  by  London ; 
and  London  gets  the  profit.  Last  year  we  exported  six  hundred 
and  fifty  million  dollars  worth  of  cotton.  This  amount  was  largely 
financed  by  sixty  to  ninety-dav  bills  drawn  on  Liverpool  or  Berlin. 
The  business  was  done  and  the  profits  received  bv  foreign  banks 
and  this  large  sum  was  in  the  last  analysis  paid  bv  the  cotton 
planter  himself.  We  are  now  spending  five  hundred  millions  to 
build  the  Panama  Canal  and  we  should  be  able  to  finance  our  own 
products  and  'be  able  to  profit  by  the  canal  instead  of  having 
to  pay  increased  millions  to  foreign  bankers.  The  National 
"Reserve  Association  meets  this  defect  and  offers  a  remedv.  This 
plan  will  be  able  to  meet  this  demand,  first,  through  its  provision* 
whereby  the  banks  can  rediscount  bills  of  exchange,  notes,  drafts, 
etc.,  and  second,  through  its  liberal  provisions  whereby  banks  may 
be  organized  under  it  in  the  foreign  countries  and  there  do  the 
business  of  this  country.  Thus,  under  the  National  Reserve  Asso- 
ciation we  will  be  able  to  finance  our  own  exports,  our  Merchant 
Marine  will  again  flourish,  and  we  will  be  able  to  stand  at  the  top 
in  all  fields. 

My  third  point.  The  National  Eeserve  Association  will  give  us 
better  credit  facilities.  This  point  stands  out  at  once  as  one  of  the 
preeminent  reasons  for  the  adoption  of  the  plan  of  the  National 
Eeserve  Association.  In  modern  times  money  transactions  are 


Banking  and  Currency  Reform  33 

based  upon  credit,  and  the  modern  monetary  system  is  based  upon 
a  small  foundation  of  gold  upon  which  are  added  numerous  obliga- 
tions payable  in  gold  which  are  settled  by  clearings  of  credit.  This 
•factor  of  credit  is  more  important  in.  business,  in  banking,  in 
exchange  than  the  actual  gold.  This,  therefore,  is  one  of  my  main 
reasons  in  advocating  the  adoption  of  the  National  Reserve  Asso- 
ciation ;  that  the  proposed  plan  aims  at  establishing  standard  values 
for  which  a  broad  market  can  be  created,  so  that  assets  can  be 
quickly  turned  into  bank  credits. 

Tn  the  discussion  of  this  section  of  the  plan,  two  facts  are  brought 
before  our  notice :  first,  that  our  present  system  fails  to  break  panics 
simply  because  it  provides  for  no  definite  and  well  regulated  credit 
facilities,  and  second,  that  the  credit  facilities  of  the  plan  of  the 
National  Reserve  Association  have  always  succeeded  in  averting 
panic  runs  and  prevented  financial  disturbances. 

In  1893,  during  a  panic  period  of  seven  months,  the  legal  tender 
money  held  by  the  national  banks  reached  23.2  per  cent  of  their 
net  deposits;  liquidation  of  net  deposits  amounted  to  $203,000,000 
outside  of  the  reserve  cities.  The  reserves  amounted  to  30  per 
cent  of  deposits,  being  double  the  legal  requirements.  Here  is  a 
system  which  failed  to  break  a  panic  for  a  period  of  seven  months 
even  with  cash  reserves  amounting  to  double  the  legal  requirements. 
The  lack  of  proper  system  of  credit  expansion  was  responsible  for 
the  panic  run. 

Again,  look  at  our  panic  of  1907.  During  this  disastrous  year 
we  had  no  war  scare,  the  country  was  full  of  gold,  but  sales  of  50 
per  cent  to  100  per  cent  could  not  bring  money  because  our  system 
had  killed  our  own  confidence  in  our  own  credit. 

The  plan  of  the  National  Reserve  Association  has  been  modeled 
after  the  banking  systems  of  England,  France  and  Germany.  The 
main  head,  however,  in  which  identity  exists  between  the  systems 
is  to  be  found  in  the  credit  facilities  features.  In  other  words,  the 
method  of  banking  a  panic  and  meeting  the  annual  crop-moving 
deficiency  in  England,  France  and  Germany  would  be  identical 
with  the  method  necessarily  taken  by  the  plan  of  the  National 
Reserve  Association.  These  European  systems  have  avoided  -panics 
and  other  financial  disturbances  because  of  extensive  credit  facili- 
ties identical  with  those  of  the  plan  of  the  National  Reserve  Asso- 
ciation. 

During  the  recent  Morocco  crisis,  a  war  scare  developed  in  France 
and  actual  hoarding  of  gold  began;  the  withdrawals  from  deposit 
banks  were  alarming.  But  there  followed  no  panic,  the  Bank  of 


34  University  of  Texas  Debates 

France  issued  notes  freely,  the  French  banks  collected  their  hold- 
ings of  foreign  paper  and  the  general  confidence  in  the  bank's  power 
to  cope  with  the  situation  overcame  the  fright  without  the  calamities 
that  would  have  followed  with  us.  All  because  of  credit  facilities 
which  our  present  system  lacks  and  which  the  plan  for  a  National 
Reserve  Association  possesses. 

When  France  withdrew  from  Germany  more  than  two  hundred 
million  marks  that  had  been  invested  there,  when  England  and 
Russian  money  was  called  back,  when  runs  began  on  savings  banks, 
Germany  had  to  face  a  crisis  identical  with  our  panic  of  190?'. 
What  happened  ?  The  Reichbank  rapidly  increased  its  credit  facil- 
ities by  about  $150,000,000.00.  Moreover,  it  had  accumulated  in 
times  of  peace  vast  sums  of  foreign  bills,  and  when  rates  of  ex- 
change moved  up  to  a  point  warranting  gold  exports,  it  began  to 
sell  these  foreign  holdings.  At  the  same  time,  a  slight  increase  in 
its  rate  took  place,  which  brought  new  money,  mainly  American,  i 
Germany's  assistance.  This  inflow  of  foreign  money  was  increased 
by  the  sale  abroad  of  German  treasury  notes.  All  because  of  credit 
facilities  which  our  present  system  lacks  and  which  the  plan 
for  a  National  Reserve  Association  possesses. 

Commercial  paper  and  bank  acceptances  form  the  main  assets 
of  European  banks.  These  bills  have  the  widest  possible  market, 
when  millions  are  exchanged  daily  with  the  margins  of  one-six- 
teenth per  cent  of  one-eighth  per  cent  in  the  interest  rate  without 
the  necessity  of  scrutinizing  the  paper  when  the  bargain  is  struck. 
Everywhere,  bills  of  exchange  have  been  standardized,  and  a  long 
list  of  financial  success  is  the  result.  Yet,  these  same  credit  facili- 
ties are  provided  for  in  the  plan  of  the  National  Reserve  Associa- 
tion, and  still  we  hesitate  about  its  adoption.  This  system  is 
built  upon  credit  as  it  necessarily  should  be.  To  be  safe  it  should 
make  cash  less  valuable  or  attractive  than  bank  credit.  This  it 
does  by  allowing  depositor  and  bank  alike  to  turn  cash  holdings  into 
interest-bearing  bank  credits.  Thus,  cash  is  allowed  at  all  times 
to  return  freely  and  rapidly  into  the  central  reserve  of  the  National 
Reserve  Association.  The  Association  would  then  become  the 
safety  valve  of  our  Nation.  Its  existence  plus  its  ability  to  main- 
tain the  Nation's  credit  would  create  that  safety  for  calculating 
credits  which  would  make  the  whole  system  practicable.  By 
increasing  or  decreasing  its  rate  of  interest,  by  investing  in  the 
nation's  commercial  paper,  by  accumulating  holdings  of  foreign 
paper,  all  of  which  is  included  in  this  plan,  it  would  become  strong 
enough  to  give  efficient  and  elastic  service  in  times  of  panics  and 
thus  protect  each  bank  individually  in  time  of  need. 


Banking  and  Currency  Reform  35 

On  the  one  hand,  therefore,  you  have  our  present  system,  incapa- 
ble of  preventing  panics,  incapable  of  rendering  help  in  times  of 
need,  incapable  of  efficient  credit  regulation,  incapable  of  protec- 
tion; on  the  other  hand,  the  proposed  plan  of  the  National  Reserve 
Association  with  extensive  credit  facilities,  with  ample  provision 
for  giving  help,  with  the  opportunity  and  power  to  better  the 
Nation's  finances,  with  success  and  experience  behind  it,  with  a 
record  of  stability,  utility  and  practicability  upholding  it.  Reform- 
ation and  renovation  of  our  present  monetary  system  is  absolutely 
necessary.  The  North  needs  it,  the  -South  needs,  the  East  needs 
and  West  need  it.  Why,  gentlemen,  during  the  last  year  eight 
national  banks,  the  very  foundation  of  our  monetary  system  failed, 
and  eighty-three  national  banks  were  placed  in  voluntary  liquida- 
tion. The  foremost,  the  sanest,  the  most  practicable  remedy  is  to 
be  found  in  the  plan  for  a  National  Reserve  Association  as  proposed 
by  the  National  Monetary  Commission. 

FIRST   NEGATIVE    SPEECH 

BY  TOM  B.  RAMEY,  OF  TYLER,  TEXAS. 

Ladies  and  Gentlemen: 

The  career  of  the  so-called  Aldrich  Plan  has  been  most  extraor- 
dinary. For  quite  a  time  the  plan  seemed  certain  of  success,  and 
all  that  appeared  to  be  lacking  was  the  formality  of  passing  the  bill 
in  Congress.  But  gradually  the  tide  of  public  sentiment  has 
changed,  until  to-day  its  staunchest  supporters  have  abandoned 
all  hope  of  its  being  enacted  into  law  in  its  present  form.  At  New 
Orleans  in  1911,  the  American  Bankers'  Association  gave  its 
unqualified  approval  to  the  plan  of  the  National  Monetary  Commis- 
sion. But  at  Detroit  last  September,  the  same  Association  of 
.bankers  totally  abandoned  the  Aldrich  Plan,  and  resolved  to  cooper- 
ate with  any  and  all  persons  in  divising  a  better  financial  system. 
In  1911  we  saw  in  the  Aldrich  Plan  a  scheme  of  reform  calculated  to 
satisfactorily  remedy  all  the  evils  in  our  present  banking  system.. 
In  1912  we  saw  in  it  a  plan  strongly  repudiated  by  the  leading  opin- 
ion of  the  country,  we  have  seen  it  specifically  rejected  by  the 
Democratic  platform,  specifically  opposed  by  the  Progressive  plat- 
form, and  as  specifically  ignored  by  the  Republican  platform. 

When  we  think  of  the  powerful  influence  and  pressure  that  has- 
been  brought  to  bear  in  the  attempt  to  crystalize  sufficient  senti- 
ment to  insure  the  passage  of  the  Aldrich  Bill,  we  sometimes  won- 


36  University  of  Texas  Debates 

der  that  it  proved  a  failure.  In  view  of  the  fact,  however,  that  it 
did  not  succeed  in  spite  of  the  powerful  influence  behind  it,  we  are 
inevitably  led  to  conclude  that  the  plan  must  contain  certain  funda- 
mental features  that  are  objectionable  to  the  people  of  this  country. 
It  is  our  intention  in  this  discussion  to  expose  the  most  flagrant 
faults  in  the  Aldrich  Plan,  and  to  show  you  how  the  proposed  scheme, 
if  enacted  as  a  remedy  for  the  evils  in  our  present  banking  system, 
would  be  impracticable  and  undesirable. 

Certainly  one  of  the  most  serious  objections  to  the  Aldrich  Plan- 
arises  from  the  opportunity  "afforded  by  it  for  the  inflation  of  our 
currency  and  the  over-extension  of  credit.  The  fundamental  fea- 
ture of  the  National  Reserve  Association  is  to  concentrate  a  great 
part  of  the  cash  reserves  of  the  banks  of  the  country  into  one  great 
fund  to  be  used  as  a  sort  of  common  reserve  against  bank  deposits, 
and  at  the  same  time  to  act  as  a  basis  for  an  issue  of  credit  currency, 
which  would  eventually  become  our  principal  circulating  medium. 
The  Association  will  have  the  power  to  issue  its  notes  to  practically 
an  unlimited  amount.  Section  51  of  the  Aldrich  Bill  makes  pro- 
vision for  an  uncovered  note  issue  of  one  billion  two  hundred  mil- 
lion dollars  without  any  effective  prohibitive  tax.  Mark  you,  this 
sum  is  far  in  excess  of  the  uncovered  untaxed  note  issue  permitted 
by  the  twenty  great  central  banks  of  Europe  combined. 

The  affirmative  maintain  that  the  greatest  and  most  fundamental 
evil  in  our  present  banking  svstem  is  its  inelasticity.  They  tell 
us  that  our  money  lacks  a  needed  elasticity  and  is  not  responsive 
to  the  demands  of  trade  and  commerce.  Experience  has  taught 
us  that  the  money  supply  is  subject  to  the  law  of  supply  and  demand 
ihe  same  as  other  commodities  are,  and  that  it  flows  automatically 
from  communities  where  it  is  over-abundant  to  those  in  which  it  is 
more  in  demand.  This  is  what  constitutes  the  true  elasticity  that 
money  should  possess.  But  this  natural  elasticity  will  be  destroyed 
if  a  large  issue  of  credit  notes  is  made,  as  is  proposed  under  the 
Aldrich  Plan.  The  elasticity  claimed  for  these  credit  notes  is  that 
they  will  be  issued  only  for  the  regular  commercial  demand,  and 
will  be  retired  when  that  demand  is  satisfied.  But  experience  in 
the  United  States  has  demonstrated  that  bank  notes  issued  upon  the 
credit  basis  will  continue  in  circulation  until  they  wear  out.  Paper 
money  once  issued  and  absorbed  becomes  a  "part  of  the  active  capi- 
tal of  the  country,  and  its  destruction  has  the  same  effect  as  the 
destruction  or  withdrawal  of  capital  in  any  other  form.  The 
panic  of  1873  was  caused  by  the  attempt  of  the  government  to 
withdraw  from  circulation  the  legal  tender  notes  which  were  never 


Banking  and  Currency  Reform  37 

intended  to  remain  permanently  in  our  money  system.  But  the 
calling  in  of  so  much  currency  was  the  taking  away  of  so  much 
capital  from  active  use.  and  this  constituted  a  draft  upon  the  vol- 
ume remaining  which  it  could  not  stand,  and  a,  panic  resulted.  The 
Government  soon  abandoned  the  undertaking,  however,  and  we  have 
the  legal  tender  still  with  us.  The  history  of  the  operations  of 
cur  national  bank  currency  also  illustrates  this  point.  Since  its 
first  issue  the  volume  outstanding  of  these  notes  has  steadily 
increased,  and  has  rever  decreased,  regardless  of  the  demands  of 
commerce  and  trade.  In  1900  the  amount  of  these  notes  was 
$200,000,000;  while  to-day  it  is  $700,000,000,  which  represents 
an  increase  in  ten  years  of  two  hundred  and  fifty  per  cent.  At 
no  period  has  there  ever  been  noticed  the  slightest  symptoms  of  this 
mysterious  elasticity,  the  notes  increasing  the  same  whether  money 
was  easy  or  tight. 

It  is  now  generally  conceded  by  the  experienced  bankers  of  the 
country  that  our  present  currency  issue  is  excessive,  and  would 
seem  to  demand  some  restraining  action  by  Congress.  Even  the 
strongest  proponents  of  the  plan  of  the  National  Monetary  Com- 
mission, including  Professor  Laughlin,  admit  that  the  evils  they 
complain  of  in  our  present  system  are  not  due  to  a  scarcity  of 
our  currency.  But  the  Aldrich  Plan,  instead  of  proposing  to  put 
a  check  on  further  expansion,  would  give  the  National  "Reserve 
Association  the  power  to  increase  the  existing  volume  of  our  cur- 
rency to  an  unlimited  extent.  The  amount  of  our  so-called  infe- 
rior currency  outstanding  at  present  is  as  follows:  Legal  tender 
notes,  346  million  dollars;  legal  tender  silver,  550  million  dollars; 
and  national  bank  notes,  700  million  dollars,  making  the  vast  sum 
total  of  1596  million  dollars.  Gentlemen,  I  ask  you  how  we  can 
possibly  ignore  all  laws  of  monetary  science,  and  still  further  inflate 
our  currency  by  eliminating  the  700  millions  of  bank  notes,  and 
substituting  therefor,  as  provided  in  the  Aldrich  Bill,  the  enormous 
sums  of  900  million  dollars  of  untaxed  National  Keserve  Associa- 
tion notes,  with  an  additional  300  millions  of  notes  only  taxed  li 
per  cent. 

There  is  no  limit  fixed  upon  the  note-issuing  power  of  tha 
National  Reserve  Association  except  that  a  reserve  of  at  least  33^ 
per  cent  must  be  held  in  the  vaults  of  the  Association  in  lawful 
money.  The  balance  may  be  represented  by  commercial  paper. 
Even  this  minimum  reserve  will  likely  be  considerably  reduced  by 
the  provision  made  in  Section  42  of  the  Bill  which  permits  the 
Apsociation  to  deduct  half  of  the  amount  of  bonds  which  it  takes 


38  University  of  Texas  Debates 

over  from  national  banks  from  the  liabilities,  in  effect  using  such 
bonds  as  partial  reserve.  The  notes  of  the  Association  will  be 
merely  paper  promises  to  pay,  the  same  as  the  notes  of  any  other 
corporation.  While  they  would  circulate  freely  as  money,  thev 
would  not  be  money  in  the  basic  sense.  You  can't  make  a  dollar 
out  of  33 J  per  cent  gold  and  66  J  per  cent  promise,  and  he  always 
sure  that  that  dollar  is  going  to  be  just  as  good  as  a  gold  dollar. 
At  any  rate  you  can't  pay  foreign  debts  with  that  kind  of  money. 

What  will  be  the  result  of  this  unprecedented  expansion  of  our 
currency  ?  Instead  of  working  to  prevent  the  occurrence  of  panics 
and  periods  of  business  depression,  it  will  only  tend  to  au^invat" 
the  evil.  One  of  the  strongest  supporters  of  the  Aldrich  Plan 
frankly  concurs  in  the  opinion  that  the  origin  of  each  recurring 
period  of  tight  money  in  this  country  can  be  traced  to  preceding 
periods  of  easy  money.  It  is  an  indisputable  fact  that  commerce 
suffers  more  in  the  long  run  from  periods  of  over-abundance  of 
our  present  circulation  than  from  scarcitv. 

Our  friends  of  the  affirmative  ask  us,  if  the  paper  discounted  by 
the  National  Eeserve  Association  must  be  based  on  actual  commer- 
cial transactions,  how  it  is  that  such  inflation  is  possible?  The 
answer  is  simple.  Although  for  ordinary  times  the  loans  of  the 
National  Eeserve  Association  itself  are  restricted  to  commercial 
paper,  there  is  nothing  to  prevent  its  member  banks  from  making 
any  kind  of  loans  they  please.  The  purpose  of  the  Reserve  Associa- 
tion is  to  supply  the  banks  of  the  country  with  currency  as  called 
for,  and  thereby  the  Association  becomes  practically  an  appendage 
to  each  member  bank  whose  ordinary  resources  are  thus  immensely 
increased  by  the  note-issuing  privilege  indirectly  conferred  upon  it. 
Now,  it  is  well  known  to  most  of  us  that  nearly  all  of  our  large 
city  banks  invest  their  resources  in  stocks,  "bonds  and  similar  secur- 
ities, rinding  it  far  more  profitable  to  make  this  class  of  loans  than 
to  hold  their  funds  for  the  inconstant  demands  of  commerce.  In 
the  fall  of  the  year  when  the  usual  commercial  demands  occur,  the 
Reserve  Association  will  relieve  the  banks  of  their  commercial  loans, 
and  they  will  not  be  obliged  to  call  in  their  loans  on  stocks  and 
bonds  but  will  be  able  to  continue  their  investments  in  these  specu- 
lative securities.  Should  this  latter  class  of  loans  call  for  more 
money  than  their  commercial  paper  can  supply,  then  the  National 
Reserve  Association  may  loan  them  direct  upon  their  own  notes, 
provided  such  are  endorsed  by  a  local  association.  It  thus  can  be 
plainly  seen  that  the  Aldrich  Plan  not  only  offers  a  large  field  for 
inflation,  but  for  dangerous  speculation  as  well. 


Banking  and  Currency  Reform  39 

Mr.  Aldrich  says  that  under  his  r»lan  the  banks  of  the  country 
will  be  able  to  replenish  their  reserves  indefinitely.  Is  this  not 
equivalent  to  saying  that  the  banks  may  expand  their  loans  indefin- 
itely ?  So  long  as  the  Reserve  Association  stands  ready  at  all  times 
to  convert  commercial  paper  into  circulating  notes  which  can  be 
used  by  the  banks  to  purchase  more  commercial  papers,  which  in 
turn  should  be  converted  into  circulating  notes,  and  so  on  indefin- 
itely, it  would  seem  that  there  would  be  little  check  on  inflation 
except  such  self-restraint  as  each  individual  bank  might  be  able  to 
exercise.  As  an  illustration  of  what  could  be  done  with  this  plan 
in  operation,  let  us  say  the  Austin  National  Bank  has  $200,000 
in  gold  in  its  vaults.  Suppose  this  is  deposited  with  the  National 
Reserve  Association,  and  credit  is  taken  for  it.  Under  the  pro- 
posed law  the  Austin  National  Bank  still  counts  this  two  hundred 
thousand  dollars  as  reserve  cash  on  hand.  The  Reserve  Association 
also  counts  this  gold  as  part  of  its  reserve,  upon  which  it  issues 
two  hundred  thousand  dollars  worth  of  its  own  notes.  Now  let  us 
suppose  that  the  American  National  Bank  is  short  in  its  reserves, 
and  goes  to  the  National  Reserve  Association  with  two  hundred 
thousand  dollars  in  commercial  paper  for  discount.  The  Reserve 
Association  pays  for  this  paper  with  its  own  notes,  which  are  se- 
cured by  the  same  funds  that  count  as  legal  reserve  for  the  Austin 
National  Bank.  Thus  the  two  hundred  thousand  dollars  in  gold 
which  now  counts  as  reserve  for  the  Austin  National  Bank,  would 
under  the  proposed  plan  count  as  cash  reserve  in  three  places. 
First,  it  would  count  as  full  reserve  against  eisrht  hundred  thousand 
dollars  of  deposits  in  the  Austin  National  Bank;  second,  as  full 
reserve  against  two  hundred  thousand  dollars  of  notes  and  two 
hundred  thousand  dollars  of  deposits  in  the  National  Reserve  Asso- 
ciation ;  and  third,  as  full  reserve  against  eight  hundred  thousand 
dollars  of  deposits  in  the  American  National  Bank.  In  other 
words,  the  same  two  hundred  thousand  dollars  which  to-dav  acts  as 
reserve  for  eight  hundred  thousand  dollars  of  deposits,  would  under 
the  reform  system  serve  as  reserve  against  two  millions  of  liabili- 
ties of  three  different  concerns. 

Assuming  that  the  plan  were  in  operation,  and  that  all  the  banks 
of  the  country  that  are  now  eligible  became  members  of  the  Associa- 
tion, they  would  at  once  have  the  right  to  borrow  from  the  Associa- 
tion six  thousand  millions  of  dollars,  and  in  addition  to  this  would 
have  the  power  to  accept  the  paper  of  business  concerns  to  the 
amount  of  two  thousand  millions  of  dollars.  Bear  in  mind  that 
this  sudden  addition  to  the  powers  of  credit  expansion  is  not 


40  University  of  Texas  Debates 

intended  only  for  emergency,  but  as  a  function  to  be  exercised 
by  the  Association  under  normal  conditions,  and  in  the  course  of 
everyday  business.  Whenever,  in  the  opinion  of  the  managers  of 
the  Reserve  Association,  the  public  interests  so  require,  in  addition 
to  the  above  powers  set  forth,  the  Association  may  discount  the 
direct  obligations  of  the  subscribing  banks.  To  this  there  is  no 
limit  whatsoever. 

One  of  the  leading  arguments  that  has  been  advanced  in  favor  of 
the  Aldrich  Plan  is  that  it  will  create  a  stable  and  uniform  mar- 
ket for  discounting  commercial  paper.  Section  30  of  the  Bill 
provides  for  a  uniform  rate  of  discount  throughout  the  United 
States.  Without  any  argument  we  readily  see  that  this  provision 
is  unjust,  .for  it  would  compel  the  small  country  banks  with  small 
resources  to  compete  on  the  same  plane  with  the  large  citv  banks 
which  have  almost  unlimited  resources.  This  would  literally  force 
the  smaller  banks  out  of  business.  Again,  our  friends  of  the  affirm- 
ative fail  to  consider  that  the  best  paper  handled  bv  a  majority  of 
our  banks  to-day  is  not  included  in  what  the  Aldrich  Plan  contem- 
plates as  commercial  paper.  It  has  been  estimated  that  hardly 
one-tenth  of  the  total  loans  and  discounts  of  the  banks  of  Texas 
to-day  will  be  acceptable  to  the  National  Eeserve  Association  for 
collateral.  Any  reliable  banker  in  Texas  will  tell  you  that  the 
bulk  of  the  loans  made  by  the  banks  of  the  State  to-day  on  com- 
mercial transactions,  particularly  the  smaller  country  banks,  are 
long  time  loans,  ranging  from  eight  to  twelve  months  in  duration. 
We  can  readily  see  that  the  twenty-eight-day  discounting  privilege 
of  the  Association,  or  even  the  four  months'  privilege,  would  be  of 
little  benefit  to  the  local  banks  in  making  loans  necessary  each  year 
to  the  farmers  for  producing,  harvesting  and  marketing  cotton, 
grain,  sugar  and  other  agricultural  products.  These  processes 
usually  require  from  six  to  nine  months  time,  and  for  this  reason, 
if  no  other,  the  smaller  banks  of  the  country  prefer  the  longer  time 
loans.  The  only  banks  that  would  benefit  by  the  discounting  privi- 
leges of  the  National  Reserve  Association  would  be  the  large  banks 
in  the  two  or  three  monev  centers  of  the  country.  As  I  have  shown 
you  most  of  the  loans  of  these  banks  are  on  stocks  and  bonds,  and 
the  short  time  discounting  privileges  of  the  Association  furnishes 
them  an  adequate  means  to  further  their  speculation  in  these  securi- 
ties. 

We  have  heard  much  the  past  few  years  about  the  shortcomings 
of  our  present  banking  system  in  the  United  States,  and  some  have 
gone  so  far  as  to  agree  with  Andrew  Carnegie  that  it  is  the  worst 
system  in  the  world.  But  when  we  learn  that  the  systems  in  other 


Banking  and  Currency  Reform  41 

countries  are  faulty  also,  and  have  just  as  many  panics  as  we  have, 
and  when  we  remember  that  this  country  has  had  unparalleled 
prosperity  under  tho  existing  system — even  a  fair  degree  of  pros1 
perity  came  to  Andrew  Carnegie  himself — we  should  hesitate  for 
a  long  time  before  giving  approval  to  any  new  untried  scheme  that 
is  as  revolutionary  in  character  as  is  the  Aldrich  Plan.  We  do  not 
contend  that  the  present  system  is  absolutely  infallible,  and  we 
admit  that  its  growth  and  career  has  been  irregular  and  unsys- 
tematic. But  it  has  gained  much  from  actual  experience,  and  it  now 
represents  an  almost  perfect  adaption  to  the  conditions  under 
which  it  exists.  The  living  organism  is  now  in  evidence,  and 
\vhatever  it  has  done  in  the  way  of  reform  should  be  in  the  direc- 
tion of  improving  and  strengthening  this  system,  not  destroying  it. 
The  people  of  America  under  no  conditions  will  consent  to  a  bank- 
ing plan  that  will  completely  undermine  our  present  independent 
and  decentralized  system  that  has  played  a  most  important  part  in 
the  upbuilding  and  development  of  the  nation.  The  burden  of 
proof  is  upon  those  of  the  affirmative?'  There  devolves  upon  them 
the  obligation  not  only  of  proving  that  their  proposed  plan  will 
satisfactory  remedy  all  the  evils  in  the  existing  banking  system, 
but  also  of  showing  beyond  a  reasonable  doubt  that  the  objections 
to  their  plan  as  set  forth  by  the  negative,  are  totally  unfounded. 

SECOND  AFFIRMATIVE  SPEECH. 

BY  SYLVAN  LANG,  OF  SAN  ANTONIO,  TEXAS. 

1/r.  Chairman,  Board  of  Judges J  Ladies  and  Gentlemen: 

My  colleague  has  already  explained  to  you  the  evils  existing 
to-day  in  our  monetary  system,  the  plan  for  a  National  Reserve 
Association,  and  how  this  plan  when  applied  to  our  modern  condi- 
tions, satisfactorily  meets  all  our  needs.  But  it  does  more  than 
this,  for  in  it  there  are  safeguards  and  provisions  which  will  prevent 
its  misuse  and  which  render  ridiculous  all  attempts  of  the  oppo- 
nents of  the  plan  to  criticize  it. 

Standing  out  as  one  of  the  preeminent  evils  of  the  present  sys- 
tem, both  in  the  opinions  of  such  experts  as  Dr.  Seligman  of  Colum- 
bia and  Dr.  Scott  of  Wisconsin,  and  appearing  from  the  recent 
hearings  of  the  Money  Trust  Investigation  Commission,  is  the  fact 
that  the  money  of  trie  country  centers  at  all  times  in  New  York 
City,  for  as  the  banks  must  keep  part  of  their  funds  in  liquid  form, 
and  as  they  can  get  2  per  cent  in  New  York  on  call  loans;  while 
if  the  money  were  kept  at  home,  it  would  either  lie  idle  or  else  be 


42  University  of  Texas  Debates 

converted  into  dead  assets  "by  being  invested  in  commercial  paper, 
the  banks  naturally  send  their  surplus  funds  to  New  York.  Out 
of  this  condition  arises  the  difficulty  of  financing  our  crops  annu- 
ally, as  was  illustrated  last  fall,  and  the  strange  spectacle  as  in 
1907,  that  when  our  country  is  most  prosperous,  and  our  crops  the 
largest  even  then  a  panic  is  quite  likely  to  result  from  the  competi- 
tion between  the  farmers  who  need  this  monev  to  move  their  crops 
and  the  Wall  Street  speculators  who  are  using  this  money,  combin- 
ing to  drive  up  unreasonably  the  interest  rates  on  our  limited, 
inelastic  money  supply.  It  is  this  condition  which  any  plan  for 
monetary  reform  must  rectify,  and  a  question  raised  by  some  per- 
sons is  whether  the  plan  we  propose  will  perform  this  function. 
However,  when  we  look  at  the  conditions  which  draw  the  money 
to  New  York,  we  shall  see  how  this  plan  strikes  at  the  root  of  and 
will  eradicate  this  evil. 

Our  present  system  requires  that  all  banks  keep  a  reserve  against 
deposits.  Small  country  banks  must  maintain  a  reserve  of  15  per 
cent — 9  per  cent  of  which  they  may  send  to  reserve  and  central 
reserve  cities  to  receive  interest  upon  and  can  still  count  it  as  a 
part  of  their  reserve.  The  reserve  city  banks,  as  in  Galveston  and 
Dallas,  must  maintain  a  reserve  of  25  per  cent  against  deposits, 
12£  per  cent  of  which  they  may  send  to  the  three  central  reserve 
cities — New  York,  Chicago,  or  St.  Louis,  and  can  still  count 
it  as  part  of  their  reserve.  Though  these  banks  may  send 
the  major  portion  of  their  reserves  to  one  of  the  three  cen- 
tral reserve  cities,  they  must  keep  it  in  such  form  that  they  can 
get  it  at  any  time  to  meet  a  demand  in  any  particular  locality. 
Therefore  their  correspondent  banks  must  of  necessity  make  call 
loans  for  them,  as  otherwise,  the  money  could  not  be  easily  secured, 
and  the  reserve  would  not  be  maintained  in  a  liquid  form.  New 
York  is  our  only  big  city  where  extensive  loans  of  this  nature  are 
made,  and  the  banks  to  receive  the  2  per  cent  call  money  rate 
which  they  can  secure  by  sending  their  monev  to  New  York,  con- 
tinually send  part  of  their  reserves  there,  thus  furnishing  cheap 
money  for  speculation  and  Wall  Street  purposes,  which  every  few 
years  is  bound  to  culminate  in  an  over-extension  of  credits  and 
consequent  panic,  and  making  it  extremely  difficult  to  secure  this 
money  throughout  the  country  when  actually  needed  for  crop- 
moving  purposes.  The  fact  that  the  average  deposits  of  country 
banks  in  New  York  institutions  is  $600,000,000.00  and  that  on 
November  1,  1912,  only  last  fall,  these  banks  had  upwards  of 
$723.000,000.00  in  New  York  when  the  monev  was  badlv  needed 


Banking  and  Currency  Reform  43 

over  the  whole  nation,  amply  proves  the  seriousness  of  this  situa- 
tion. 

To  rectify  this  evil  we  point  out  to  our  opponents  Sections  26,. 
27,  and  28  of  the  plan  by  which  it  is  provided  that  all  banks  which 
are  members  of  the  Association  may  rediscount  28'  days  and  4 
months  paper  and  also  90-day  acceptances  and  that  by  turning  over 
this  note  to  the  Central  Association  the  local  bank  receives  an 
amount  of  bank  noten  equivalent  to  the  amount  of  the  loan,  which 
amount  the  bank  turns  over  to  its  customers.  In  other  wordrf,  there 
will  no  longer  be  a  necessity  for  these  banks  to  send  their  money 
to  New  York  and  loan  it  out  at  2  per  cent  in  order  to  obtain  ready 
money,  for  they  can  secure  the  cash  they  need  at  any  time  by  sim- 
ply rediscounting  all  good  commercial  paper  at  6  per  cent.  How 
would  any  common  sense  individual  or  institution  conduct  him- 
self or  itself  under  such  circumstances?  When  in  place  of  their 
only  being  able  to  keep  part  of  their  reserve  in  liquid  form  and 
profiting  from  it  by  loaning  it  out  in  New  York  at  2  per  cent  on 
call  loans,  they  can  always  secure  cash  for  their  reserve  by  redis- 
counting good  commercial  paper  at  6  per  cent,  will  they  not  keep 
their  money  at  home  where  needed,  where  it  will  not  drift  into 
Wall  Street  and  aid  in  promoting  panics,  where  it  can  be  loaned 
out  for  legitimate  crop-moving  purposes  at  a  higher  and  more 
profitable  rate  than  was  secured  for  the  same  money  when  used 
for  call  loans,  and  where  it  can  thus,  with  the  greatest  elasticity, 
expand  and  contract  according  to  legitimate  business  needs,  and 
thus  prove  to  be  a  satisfactory  method  of  relieving  the  stringency 
at  those  two  most  essential  periods — during  threatened  panics  and 
for  the  annual  crop-moving  demands? 

Thus  we  see  that  by  the  adoption  of  this  plan  the  money  of  tho 
country  will  not  center  into  New  York  to  such  an  extent  as  it  does 
to-day,  and  therefore,  that  all  criticisms  of  the  plan  in  this  respect 
are  unjustified.  Among  all  of  the  arguments  and  objections  which 
have  been  brought  forward  against  this  plan,  there  are  three  which 
stand  out  prominently.  First,  that  this  currency  will  not  contract 
after  once  being  issued ;  second,  that  this  is  just  a  scheme  of  Wall 
Street  to  gain  control;  and,  third,  that  the  big  banks  will  domi- 
nate the  Association  to  the  detriment  of  the  small  banks. 

In  answer  to  their  first  objection,  we  point  out  four  provisions 
which  will  force  contraction  and  there  prevent  inflation : 

Firstly,  these  bank  notes  cannot  become  inflated,  since  they  will 
be  merely  coterminous  with  the  business  to  which  they  relate. 
These  notes  are  to  be  issued  on  28  days  or  four  months  paper  which 
is  sufficient  in  length  for  crop-moving  purposes.  So,  if  an  orange 


44  University  of  Texas  Debates 

grower  in  California,  or  a  cotton  raiser  in  Texas  wishes  to  borrow 
money  to  move  his  cotton,,  he  will  go  to  his  local  bank,  give  them 
his  note,,  and  receive  a  credit  account  for  this  amount  to  draw  upon. 
This  note  the  bank  sends  to  the  local  Association  which  transmits 
it  to  the  Central  Association,  which  then  orders  that  amount  of 
bank  notes  equivalent  to  the  amount  of  the  loan  be  turned  over  to 
the  local  bank  which  the  bank  gives  to  this  farmer.  After  the 
farmer  no  longer  needs  this  loan,  he  goes  to  his  bank,  returns  the 
money,  and  pays  off  his  note.  The  money  is  then  sent  by  the 
local  bank  to  the  Association  which  returns  the  note  it  held  as 
security,  and  thereby,  the  currency,  having  thus  been  returned  to 
the  association,  has  automatically  contracted,  as  it  will  contract 
after  the  need  for  it  has  passed. 

Secondly.  The  law  of  supply  and  demand  would  force  contrac- 
tion. It  is  an  economic  principle  that  the  price  of  any  commodity 
is  governed  by  the  amount  of  that  commodity  and  the  demand  for 
it.  So,  the  price  of  money,  that  is,  the  interest  rate  on  money,  is 
governed  by  the  money  available  for  loans,  and  the  bankers  will 
therefore  promptly  retire  the  currencv  when  not  needed,  for  they 
have  no  desire  to  see  the  interest  rate  lowered  by  keeping  this  money 
in  circulation  when  not  actually  required. 

The  third  provision  which  will  force  contraction  in  the  require- 
ment by  Section  41,  that  a  reserve  of  50  per  cent  of  the  notes  and 
deposits  be  maintained,  or  a  heavy  tax  paid  in  lieu  thereof,  so  that 
if  the  reserve  fell  to  40  per  cent  there  would  be  a  6  per  cent  tax  rm 
these  notes,  which  would  force  them  to  contract.  The  additional 
provision  that  under  no  circumstances  can  the  reserves  fall  below 
33  per  cent  and  the  fact  that  all  bank  notes  in  circulation  will 
bear  interest  at  1J  per  cent  from  90*0  to  1,200,000,000  and  5  per 
cent  above  that  amount  are  additional  safe.srnards  to  prevent  infla- 
tion. 

And,  fourthly,  we  point  out  that  by  Section  26  these  rediscounts 
are  restricted  to  commercial  paper,  and  as  we  shall  continue  to  have 
our  National  and  State  Bank  Examiners  and  our  five  reports 
annually  from  the  National  Banks,  besides  additional  monthly 
reports  by  the  Association  as  to  its  condition,  and  a  weekly  report 
to  the  Comptroller  of  the  Currency,  the  banks  will  not  dare  to 
make  loans  on  speculative  securities,  which  they  are  not  prevented 
from  loaning  on  under  the  present  laws.  And  as  I  have  shown  that 
this  plan  possesses  every  possible  means  for  a  speedv  contraction  of 
these  bank  notes  when  not  needed,  yet.  at  the  same  time,  not  rais- 
ing so  many  restriction?  as  to  make  it  next  to  impossible  to  issue 


Banking  and  Currency  Reform  45 

them  and  secure  the  benefits  therefrom,  and  as  these  rediscounts 
are  restricted  to  commercial  paper,  any  expansion  which  is  based 
on  these  legitimate  business  demands  can  not  possibly  result  in 
inflation. 

The  second  chief  objection  to  the  plan  is  that  Wall  Street  will 
gain  control  of  the  Association.  Control  of  the  Association  can  be 
secured  in  two  ways.  Firstly,  by  controlling  the  forty-six  directors 
of  the  National  Association.  Thirty  of  these  will  be  elected  from 
the  fifteen  branches  into  which  the  country  is  divided,  that  is,  two 
from  each  branch.  Now,  only  fourteen  of  these  directors  will  come 
from  the  seven  districts  in  the.  New  England,  Eastern  and  Middle 
Western  States,  while  sixteen  will  be  elected  from  the  eight  districts 
in  the  Southern  and  Western  States,  and  that  these  sixteen  will 
be  Wall  Street  men  even  our  opponents  will  not  attempt  to  assert. 
Nine  of  the  forty-six  directors  will  be  elected  by  the  various  banks 
of  this  country,  voting  in  proportion  to  their  stock  capitalization. 
Then,  say  your  opponents,  Wall  Street  with  all  its  capital  will 
surely  elect  these  nine,  and  thus  gain  the  ascendencv  in  the  Associa- 
tion. But  the  combined  capital  of  the  banks  in  the  three  central 
reserve  cities  and  also  of  the  banks  in  every  one  of  the  reserve  cities 
in  this  country  amounts  to  only  $425,000,000,  while  the  capital 
of  our  country  banks  amounts  to  $577,000,000,  or  one-third  again 
as  much.  And  it  will  lie  within  the  power  of  these  small  country 
banks,  with  their  tremendous  stock  majority,  to  elect  these  nine 
directors.  That  these  sixteen  directors  from  the  South  and  West 
and  the  nine  from  the  country  banks,  make  a  total  of  twenty-five; 
or  a  majority  of  the  board  of  forty-six  even  the  mathematics  of 
our  opponents  cannot  overcome,  But  this  is  not  all.  The  re- 
maining seven  members  of  the  Board  consists  of  the  Secretaries  of 
the  Treasury,  Agriculture,  and  Commerce  and  Labor,  the  Comp-. 
troller  of  the  Currency,  the  Governor  and  his  two  Deputies.  Do  our 
opponents  claim  that  these  men,  directly  in  the  public  eye,  will  at- 
tempt to  serve  Wall  Street?  If  not,  we  must  place  them  with  the 
other  twenty-five,  making  a  total  of  thirty-two,  or  more  than  double 
the  fourteen  directors  which  Wall  Street  might  possibly,  but  not 
probably  gain  control  over,  and  definitely  proving  that  Wall  Street 
will  not  be  able  to  control  the  Association  in  this  manner. 

But  there  is  vet  a  second  method  pointed  out  by  President  Schur- 
man  of  Cornell,  through  which  control  of  the  Association  will  be  re- 
tained by  the  local  banks,  and  .not  by  Wall  Street.  We  have  seen 
how  the  National  Directors  are  elected.  Now  the  directors  of  the 
Branch  Associations  who  elect  the  thirty  National  Directors  are 
chosen  as  follows:  one-half  are  elected  from  the  local  Associa- 


46  University  of  Texas  Debates 

tions  without  regard  to  stock  ownership;  one-third  are  elected 
according  to  the  number  of  shares  of  the  National  Association  held 
by  the  local  Association,  and  the  remaining  one-sixth  are  to  be 
elected  by  these  others,  and  shall  represent  the  agricultural  and 
industrial  interests.  The  directors  of  the  local  Associations  who 
elect  the  directors  of  the  branch  Associations  are  chosen  bv  the  local 
banks,  three-fifths  of  the  directors  being  elected  by  the  banks 
regardless  of  the  respective  capitalization,  while  the  other  two-fifths 
are  elected  according  to  the  number  of  shares  which  these  bank0 
hold  in  the  National  Association.  So  we  see  that  throughout  the 
entire  plan,  the  small  local  banks  are  given  the  power  of  electing 
a  majority  of  the  directors  of  each  association.  Thus  the  directorate 
of  the  National  Association  rests  ultimately  with  the  local  banks, 
or  as  President  Schurman  aptly  puts  teh  situation :  "That  just 
as  in  our  Federal  Government  the  localities  elect  members  of  Con- 
gress and  vote  for  president  in  proportion  to  their  population,  so 
also  while  the  Aldrich  scheme  provides  for  certain  centralized  bank- 
ing functions  which  are  essentially  National  and  vests  them  in  the 
National  Reserve  Association  which  is  superimposed  upon  our 
existing  banks  without  impairing  their  independence,  the  control 
of  the  National  Reserve  Association  itself  is  in  the  hands  of 
directors  elected  by  the  vote  of  the  localities,  their  electorate  being 
ultimately  the  local  banks." 

Now,  who  controls  the  local  banks?  Are  not  the  farmers  and 
ranch  owners  the  chief  stockholders  of  the  country  banks,  and  are 
not  the  manufacturers,  storekeepers  and  lawyers  the  chief  stock- 
holders of  the  city  banks  ?  Do  they  not  elect  the  officers  and  direct- 
ors of  these  banks,  and  will  it  not  also  lie  within  their  province 
to  elect  the  representative  from  their  bank  to  the  local  association, 
these  local  associations  to  elect  the  directors  of  the  branch  Associa- 
tions and  the  branch  Associations  to  elect  the  National  Directors? 
To  be  sure,  it  is  a  representative  and  not  a  direct  vote,  but  il  is, 
nevertheless,  these  prosperous  farmers  and  solid  business  men  who 
will  be  at  the  base  of  this  system,  and  it  will  be  within  their  power 
and  not  within  the  power  of  Wall  Street  to  elect  the  officers  who  are 
to  administer  affairs. 

The  third  chief  objection  raised  by  the  opponents  of  this  plan  is 
that  the  big  banks  will  control  the  smaller  institutions.  The  recent 
hearing  before  the  Money  Trust  Investigation  Commission  shows 
how  the  big  banks  in  New  York,  through  interlocking  directorates 
and  the  vast  amount  of  cash  which  the  country  banks  to-dav  keep 
with  them,  are  able  to  exirt  a  vast  influence  over  them.  We  point 


Banking  and  Currency  Reform  47 

out  that  under  this  Aldrich  Plan  the  small  banks  will  no  longer~bc~ 
under  the  control  of  the  large  New  York  institutions,  for  they  will 
no  longer  be  dependent  upon  them.  To-day  the  country  banks 
send  their  surplus  funds  and  part  of  their  reserve  to  New  York  in 
order  to  always  be  able  to  secure  ready  money  and  to  receive  the  2 
per  cent  interest  upon  them.  But  under  the  plan  for  a  National 
Reserve  Association  there  will  be  no  need  of  this,  for  as  these  coun- 
try banks  can  rediscount  commercial  paper  at  6  per  cent  and  always 
secure  currency  when  needed,  there  will  be  no  necessity  for  their 
sending  their  funds  to  New  York  banks,  they  will  cease  doing  so, 
and  naturally  will  no  longer  be  dependent  upon  them.  Not  alone 
will  these  small  banks  cease  to  be  dependent  on  the  bis:  banks,  but 
the  big  banks  will  no  longer  be  under  the  same  necessity  of  con- 
trolling state  banks  ?.nd  trust  companies.  The  reason  we  find  such 
control  is  because  big  national  banks  need  some  medium  through 
which  to  loan  on  real  estate  security  and  carrv  on  a  satisfactory 
savings  bank  business,  which  they  can  not  to-dav.  but  which  the 
Aldrich  Plan  provides  for,  in  that  under  it  they  can  make  limited 
loans  on  real  estate  and  liberal  provisions  are  made  whereby  they 
can  conduct  an  efficient  savings  bank  department. 

But  besides  the  small  banks  no  longer  being  dependent  on  the 
big  ones,  and  besides  there  not  being  the  same  necessity  to-day 
for  the  large  national  banks  to  control  state  banks  and  trust  com- 
panies, .even  if  the  big  banks  wished  such  control  they  would  not 
attempt  to  secure  it,  for  by  Section  7'  it  is  provided  that  if  40  per 
cent  of  the  capital  stock  of  any  subscribing  bank  is  owned  directly 
or  indirectly  by  any  other  subscribing  bank,  person,  or  corporation, 
then  neither  bank  can  vote  at  all  upon  their  stock  capitalization, 
and  these  banks,  acting  together,  can  only  have  one  vote  for  the 
election  of  directors  to  the  local  Association. 

Considering  that  only  by  voting  in  this  Association  can  a  mem- 
ber protect  its  interests,  and  considering  that  if  banks,  even  indi- 
rectlv,  own  40  per  cent  of  the  stock  of  other  banks,  all  of  these 
banks  lose  absolutely  their  right  to  vote  at  all  according  to  their 
stock  capitalization,  and  only  retain  the  power  of  collectively  cast- 
ing one  vote  for  the  directors  of  the  local  Association,  and  consider- 
ing further,  that  besides  this  penalty,  there  will  under  this  Aldrich 
Plan  be  no  incentive  for  the  big  banks  to  control  state  banks  and 
trust  companies  and  that  the  smaller  banks  will  no  longer  be  de- 
pendent on  the  large  banks,  and  also  that  the  Association  can  never 
pay  more  than  5  per  cent  dividends  on  its  stock — considering  all 
these  facts,  no  reasonable  person  can  possibly  fear  that  under  this 


48  University  of  Texas  Debates 

plan  the  big  banks  will  be  able  to,  or  will  desire  to,  control  the 
smaller  banks  of  the  Association. 

Honorable  Judges,  the  Aldrich  Plan  is  now  before  you.  We  have 
shown  you  how  the  present  defects  are  Temedied  and  how  coopera- 
tion between  the  banks,  mobilization  of  reserve  and  elasticity  in  the 
currency  and  credit  facilities  can  be  secured ;  how  the  funds  of 
the  country  will  be  kept  where  needed  and  will  no  longer  drift  to 
Wall  Street,  where  they  can  not  be  secured  readily  for  crop-moving 
purposes,  but  remain  to  aid  in  creating  panics;  how  the  claims 
of  the  opponents  of  this  plan,  that  contraction  will  not  take  place, 
that  Wall  Street  will  control  the  Association,  and  that  the  big 
banks  will  dominate  the  smaller  ones,  is  totally  unfounded  and  can 
not  possibly  occur.  And  lastly,  we  point  out  Section  58,  which 
reserves  to  Congress,  the  direct  representative  of  the  people,  the 
right  to  alter  or  amend  the  provisions  of  this  act  every  ten  years. 
We  do  not  flaunt  the  stars  and  stripes  and  ask  you  heedlessly  to 
adopt  this  plan,  but  looking  at  it  from  a  common-sense  business 
standpoint  it  appears  admirably  suited  to  meet  the  annual  crop- 
moving  demands  and  to  remedy  the  other  defects  of  the  present 
system,  while  retaining  an  elasticity  of  currency  and  structure 
which  will  provide  a  satisfactory  method  of  preventing  any  threat- 
ened panics,  and  of  solving  other  financial  problems  which  we  are 
bound  to  encounter  in  the  future  development  of  this  Nation. 

SECOND  NEGATIVE  SPEECH. 

BY    WINFREE    W.    MEECHAM,    JR.,    OF    ANDERSON,    'TEXAS. 

Mr.  Chairman^  Ladies  and  Gentlemen: 

With  the  steady  recurrence  of  panics,  it  has  become  self-evident 
that  there  are  certain  inherent  defects  in  the  present  banking  and 
currency  system,  which  must  be  remedied.  But  the  remedy  pro- 
posed must  be  one  which  does  not  increase,  but  eradicates  the  evils 
— one  which  must  be  beyond  the  danger  of  control  by  the  monied 
power  of  Wall  Street.  The  gentlemen  of  the  affirmative  submit 
as  their  plan  for  a  desirable  remedy  for  the  admitted  evils  of  inelas- 
ticity, and  the  lack  of  a  proper  discount  market,  the  plan  of  a 
National  Reserve  Association.  This  Association  is  to  be  governed 
by  an  Executive  Committee  of  nine  men,  and  is  to  have  absolute 
control  over  the  reserves  of  the  banks  of  the  country.  It  also  has 
the  power  to  make  loans,  issue  notes,  and  discount  commercial 
paper — in  short,  it  is  to  be  the  main  unit  in  the  chain  of  bank?. 


Banking  and  Currency  Reform  49 

My  colleague  has  clearly  demonstrated  to  you  that  the  pro^  ' 
scheme  is  an  undesirable  remedy,  because  it  absolutely  fails  to 
provide  an  edequate  discount  market,  and,  further,  that  it  does  not 
eradicate  the  evil  of  inelasticity,  but  tends  to  increase  it.  And 
when  we  consider  that  the  Association  is  to  be  the  unit  of  centrali- 
zation, arid  the  basis  of  every  commercial  and  financial  transaction, 
the  question  naturally  arises :  Who  will  control  this  Association  ? 
In  a  recent  address,  Mr.  Aldrich  said :  "I  realize  as  fully  as  any 
man  can,  that  no  plan  where  there  is  the  slightest  possibility  that 
Wall  Street  or  any  other  clique  or  combination  can  control,  can  or 
should  be  adopted." 

We  of  the  negative,  therefore,  insist,  third,  that  the  plan  is  an 
undesirable  remedy,  because,  despite  the  ingenious  argument  of  the 
preceding  speaker,  there  is  a  practical  certainty  that  Wall  Street 
can  and  will  control  the  Association.  Section  9  of  the  bill  pro- 
vides that  the  Association  is  to  be  operated  under  the  control  of 
fort}r-six  directors,  three  of  whom  are  to  be  elected  by  the  other 
forty-three,  while  the  Governor  is  to  be  appointed  bv  the  President 
from  three  names  submitted  to  him  by  the  Board  of  Directors:  If 
Wall  Street  can  secure  twenty- three  of  the  forty- three  directors, 
giving  them  a  majority,  it  can  control  this  unit  of  the  chain  of 
banks,  and  dominate  the  finances  of  the  Nation.  Now,  mind  you, 
nine  of  these  directors  are  elected  by  stock  in  the  Association.  Wall 
Street  and  its  interests '  are  certain  to  control  these  nine  directors, 
because  the  great  majority  of  the  stock,  which  is  the  basis  of  their 
election,  is  controlled  by  its  interests  in  the  East.  But  the  Eastern 
and  New  England  States  control  six  directors,  and  43  per  cent 
of  the  capital,  while  the  States  of  the  Middle  West  control  eight 
directors,  and  27  per  cent  of  the  capital.  By  combining  these  two, 
we  get  a  total  of  fourteen  directors  elected  and  controlled  by  the 
monied  interests  of  Wall  Street,  with  a  total  capital  of  70  per  cent. 
Combining  these  fourteen  directors,  controlled  by  the  monied  inter- 
ests of  Wall  Street,  with  the  nine  directors  elected  by  them  on  the 
basis  of  stock,  we  get  a  majority  of  twenty-three  directors.  Conse- 
quently, these  twenty-three  directors  will  control  the  election  of  thp 
Executive  Committee,  and  will  'dominate  the  Association  for  the 
specific  purpose  of  using  it  for  their  own  iniquitous  purposes  and 
benefits. 

But  the  supporters  of  this  plan  urge  and  contend  that  the  con- 
trol of  the  Association  will  be  in  the  power  of  the  smaller  individual 
banks,  because  of  their  combined  capital.  Now,  two-fifths  of  the 
local  directors  are  elected  bv  the  share  votes  of  the  individual  banks. 


50  University  of  Texas  Debates 

and,  in  turn,  the  individual  banks  of  a  district  are  dependent  upon 
the  Central  Association  of  that  district  for  their  reserves.  Under 
the  present  system,  however,  Wall  Street  controls  over  30  per  cent 
of  the  capital  stock  of  the  smaller  banks,  and  it  is  certain  that  it 
will  not  relinquish  this  control  when  it  enters  the  Association. 
Thus,  many  of  the  Central  Associations  will  be  controlled  by  Wall 
Street  from  their  inception,  thereby  making  the  combining  of  the 
smaller  individual  banks  an  utter  impossibility,  for  they  must  de- 
pend upon  the  Central  Associations  for  their  reserves. 

Now,  let  us  note  the  danger  of  control  in  the  District  Associa- 
tions. The  banks  of  the  local  Associations  are  dependent  in  the 
matter  of  reserves  and  quick  cash  demands  upon  the  monied  pow- 
ers of  St.  Louis,  Chicago,  and  New  York.  One-half  of  the  branch 
directors  are  to  be  elected  by  capital  stock,  and  one-half  bv  stock 
representatives  chosen  by  the  local  Association  directors.  But  in 
each  district,  there  will  be  a  number  of  large  banks  controlling 
more  capital  than  the  smaller  banks  combined.  These  banks  will 
dominate  the  local  Association,  and,  will,  in  turn,  be  dominated 
by  the  monied  power.  Thus  the  election  of  branch  directors  will, 
in  fact,  be  dominated  by  the  large  banks,  and  the  smaller  banks 
must  submit  to  the  directors  so  elected.  The  gentlemen  propose 
to  give  the  small  banks  a  pretense  of  power  and  representation,  but, 
in  fact,  a  pretense  only ;  for  the  larger  banks  of  the  district  will  con- 
trol. Thus,  the  gentlemen  of  the  affirmative  find  themselves  in  this 
predicament :  "If  Wall  Street  and  its  great  interests  refuse  to  come 
into  this  Association,  there  being  no  way  to  compel  them,  it  will  fail 
for  it  can  never  exist."  No !  the  danger  which  Mr.  Aldrich  fears 
is  there.  The  plan  will  be  dominated  by  the  monied  power  of 
Wall  Street  in  its  local,  District,  and  National  Associations,  thereby 
rendering  the  plan  vicious  and  undesirable,  and  it  should  be 
rejected. 

But  aside  from  the  danger  of  control  by  Wall  Street,  there  is 
another  objection  which  renders  the  plan  undesirable.  We  refer  to 
the  fact  that,  if  the  plan  is  adopted,  it  will  be  a  centralized  monied 
monopoly.  It  means  the  centralization  of  our  vast  banking  and 
currency  power  in  the  hands  of  a. few  men.  At  the  head  of  the 
entire  system  stands  the  Executive  Committee  of  nine  men.  This 
committee  of  nine  exercises  the  powers  of  the  Reserve  Board, 
and  it  is  to  be  the  real  head  of  the  svstem.  And  what  are  the  cen- 
tralized powers  of  these  men  ?  They  have  the  power  to  make  the 
by-laws  of  the  Reserve  Association;  they  make  the  by-laws  of  the 
Local  Associations ;  they  have  the  power  to  make  the  by-laws  of  the 


Banking  and  Currency  Reform  .51 

branch  Associations — in  short,  these  nine  men  alone  are  to  deter" 
mine  the  policy  of  the  entire  banking  system  of  the  United  States. 

Furthermore,  these  nine  men  have  the  power  to  expel  any  bank 
from  the  Association,  although  that  bank  may  not  voluntarily  with- 
draw from  the  Association.  These  nine  men  may  create  new  dis- 
tricts at  will,  and  they  have  the  power  to  change  the  boundaries 
,of  the  old  districts  whenever  they  see  fit.  We  submit  that  this  is 
a  power  which  should  be  exercised  by  those  in  the  local  associations, 
for  they  will  naturally  exercise  more  care  and  better  judgment 
than  nine  men  located  at  Washington.  Thus,  all  the  power  of  this 
Executive  Committee  of  nine  men  reeks  with  the  carefully  concealed 
idea  of  centralization — centralization  to  be  exercised  for  their  own 
satisfaction,  and  for  the  satisfaction  of  the  interests  which  they  will 
represent. 

But  let  us  notice  what  other  centralized  powers  these  nine  men 
may  exercise.  The  rate  of  discount  should  follow  the  la;w  of  sup- 
ply and  demand,  but  these  men  have  the  power  to  raise  the  dis- 
count rate,  and  to  lower  it  in  any  community,  district,  or  state, 
whenever  it  suits  them  to  do  so.  Thus,  they  have  the  power  to 
raise  the  rate  of  discount  to  5  per  cent  in  the  Knoxville  district, 
when,  under  the  law  of  business  demand,  it  should  be  three.  Then 
'again,  they  have  the  power  to  lower  the  discount  rate  in  the  Mem- 
phis district  to  3  per  cent,  when  by  the  law  of  supply  and  demand 
it  should  be  5  per  cent.  We  urge  that  it  is  impractical  to  place 
in  the  hands  of  nine  men,  the  power  to  make  a  uniform  rate  of 
discount,  when  the  economic  and  business  conditions  of  this  coun- 
try are  so  variable  and  so  different. 

Another  aspect  of  this  iniquitous  centralization  in  the  hands 
of  nine  men,  is  found  in  the  relation  of  the  smaller  banks  to  the 
larger  banks.  Under  this  scheme,  the  larger  banks  are  certain  to 
dominate  the  smaller  banks,  because  they  will  be  dependent  upon 
the  larger  banks  for  their  reserves.  Thus  bank  "A"  having  a 
capital  of  $150,000,000,  has  been  acting  as  the  reserve  agent  of 
bank  "B,"  with  a  capital  of  $25,000.  These  two  banks  fall  within 
the  same  District  Association,  and  it  is  but  natural  and  logical  to 
expect  that  bank  "B,"  being  dependent  upon  bank  "A"  for  its 
reserves,  will  be  dictated  to  by  bank  "A,"  when  it  comes  to  the 
selection  of  the  directors,  instead  of  acting  independently. 

Turning  now  from  these  considerations  of  this  centralized  monop- 
oly, for  whose  benefit  is  this  centralized  Association,  under  the 
control  of  nine  men,  to  be  brought  into  existence?  Is  it  for  the 
benefit  of  the  people  of  the  whole  nation?  Is  it  for  the  benefit 


5 '3  University  of  Texas  Debates 

of  every  class  of  business?  Or  rather  is  it  to  be  adopted  for  the 
benefit  of  one  particular  class,  and  that  class  the  banking  frater- 
nity? An  investigation  of  the  provisions  of  the  bill  will  show. 
The  one  fact  that  stands  out  most  prominently  is  that  the  National 
Reserve  Association  is  to  be  controlled  almost  entirely  bv  the  bank- 
ing community.  Upon  investigation,  we  find  that  all  the  directors 
of  the  local  associations  will  be  elected  by  bankers,  and  will  be 
bankers.  Five-sixths  of  the  directors  of  the  branch  associations 
will  be  bankers  and  will  be  elected  by  bankers.  Coming  to  the 
Central  Association,  which  will  be  the  dominant  body,  we  observe 
a  control  by  the  banking  community.  Fifteen  of  the  forty-five 
directors  of  the  National  Reserve  Association  are  to  be  elected, 
one  each,  by  the  boards  of  the  fifteen  branch  associations;  but 
these  branch  boards  are  to  be  elected  by  bankers,  and  five-sixths 
of  the  membership  of  each  board  consists  of  bankers.  Following 
this  process  through  each  election,  we  find  that  a  total  of  forty-two 
of  the  directors  of  this  Association  are  elected  by  bankers,  and 
will  be  bankers.  Is  it  true,  then,  that  this  Association  is  to  be 
a  benefit,  controlled  by  nine  men,  of,  for,  and  by  the  bankers? 
Is  it  wise  to  turn  the  whole  financial  system  of  this  countrv  into 
the  hands  of  bankers,  especially  when  they  are  so  cjosely  allied  ? 

We  must  bear  in  mind  that  any  change  of  the  present  banking 
system  must  be  for  the  good  of  the  public  as  a  whole.  We  must 
realize  that  the  public  deposits  of  this  Association  alone  will  exceed 
its  paid  up  capital;  that  the  funds  which  the  banks  deposit  with  the 
Association  will  be  but  the  funds  deposited  with  the  banks  bv  the 
public,  and  that  the  paper  which  the  banks  rediscount  with  it  will 
be  that  of  the  business  community.  We  must  not  forget  that  the 
National  Reserve  Association  is  to  have  a  tremendous  public  power 
and  responsibility,  through  its  right  to  fix  the  bank  rate  of  discount ; 
its  power  over  the  foreign  exchanges  and  shipments  of  gold;  its 
rights  to  issue  the  country's  only  elastic  paper  currency;  its  con- 
trol over  banks  and  its  functions  of  holding  a  large  percentage  of 
the  country's  reserve  money.  Here,  then,  is  to  be  created  a  vast 
centralized  power,  dominated  and  controlled  by  nine  men,  to 
work  its  weal  or  woe  upon  the  business  interests  of  this  country. 
We  demand  to  know,  is  it  wise  to  place  this  power  in  the  hands 
of  one  class,  to  be  operated  for  that  classes  benefit,  beyond  the  pale 
of  control  by  the  people  at  large  ?  Would  we  turn  over  the  entire 
finances  of  this  country  to  the  lawyers,  if  they  were  as  vitallv  inter- 
ested in  them  as  the  bankers  will  be  ?  No !  This  is  a  centralized 
monied  monopoly  for  the  benefit  of  the  bankers  and  the  bankers 


Banking  and  Currency  Reform  53 

alone — a  monopoly  which  has  the  power  of  life  or  death  over  the 
business  interests  of  every  community — a  monopoly  which  may 
wield  its  too  great  influence  in  politics,  to  secure  privileged  legisl9- 
ticn — a  monopoly  which  may  laugh  at  the  threats  of  those  who 
created  it.  Such  a  power  should  not  be  given  the  right  to  control 
the  finances  of  this  country. 

Honorable  Judges,  we  of  the  negative  have  shown  you  that  the 
plan  cannot  remedy  the  inelasticity  of  the  present  system,  but 
rather  that  it  tends  to  increase  it;  and  second,  that  it  absolutely 
fails  to  provide  an  adequate  discount  market,  Furthermore,  the 
danger  of  Wall  Street  controlling  the  Association  is  too  distinct  to 
be  denied,  while  the  powers  of  such  a  centralized  financial  monopoly 
are  too  great  to  be  exercised  by  nine  men.  In  short,  the  gentlemen 
of  the  affirmative  seek  elasticity,  and  the  direct  result  of  their 
efforts  is  increased  inflation;  they  plead  for  cooperation  of  all  the 
banks  for  the  benefit  of  each,  and  they  get  private  centralization — 
centralization  which  binds  together,  in  one  solid  phalanx,  every 
bank,  every  commercial,  financial,  and  political  interest — ^centraliza- 
tion which  takes  from  the  government  the  right  to  amend  for  ten 
year?,  and  subjects  to  the  danger  of  control  every  individual's 
interest  in  the  United  States  for  a  term  of  fiftv  years.  For  these 
reasons,  we  submit  that  the  plan  is  un-American,  and  is  not  to  be 
desired. 

BIBLIOGRAPHY. 

Affirmative  References. 

Laughlin's  Banking  Reform.  No.  Amer.  Rev.,  vol.  188,  pp.  212- 
25:  vol.  193,  pp.  539-50.  Independent,  Feb.  29,  March  14,  28, 
1912;  vol.  72,  p.  665.  Nation,  vol.  76,  p.  184;  vol.  92,  p.  73. 
Everybody's,  March,  1912.  Forum,  vol.  45,  pp.  539-47.  Cur.  Lit., 
Feb. '12, '1912.  Outlook,  vol.  88,  pp.  106,  149-50,  340-1,  676-7. 
Lit.  Digest,  Nov.  14,  1911,  Jan.  20,  1912,  Q.  J.  Econ  ,  vol.  20, 
p.  135.  Pamphlet.  "A  National  Reserve  Association  and  the  Cotton 
.Movement."  Banking  Reform  Series,  No.  5.  Pamphlets  issued  by 
National  Citizens'  League  for  the  Promotion  of  a  Sound  Banking 
System,  Chicago,  111.  Congressional  Record  and  periodicals  for 
June-October,  1913. 

Negative  References. 

W.  R.  Hambey,  "The  Aldrich  Plan :  A  Review  of  Its  Powers  and 
Functions."  No.  Amer.  Rev.,  March,  1912,  pp.  310-18.  Jour. 
Pol.  Econ.,  vol.  16.  pp.  94-7;  vol.  20,  pp.  25,  41.  Independent, 


•54  University  of  Texas  Debates 

•vol.  64,  pp.  427-8,  1101-2;  vol.  72,  pp.  555-58.  Nation.,  vol.  36, 
pp.  164-5;  vol.  89,  pp.  450-5.  Banking  Reform,  March  16,  1912. 
Cur.  Lit.,  vol.  50,  pp.  584-6.  House  Documents,  No.  291,  62nd 
'Congress.  Everybody's,  April,  1912.  Moody's  Mag.,  March, 
April,  May,  1912.  Speeches  by  Senator  LaFollette,  March,  1908: 
'Congressional  Record  and  periodicals  for  June-October,  1913. 


THE  UNIVERSITY  OF  TEXAS 


DEPARTMENT  OF  EXTENSION 

(CONTINUED  FROM  PAGE  TWO  INSIDE  COVER.) 

PUBLIC  WELFARE  DIVISION. 

It  is  the  purpose  of  this  Division  to  collect  data  regarding 
economic  conditions  in  the  State  and  to  furnish  the  same  to  citi- 
zens of  Texas  through  exhibits  of  photographs,  charts,  diagrams, 
statistics,  etc.,  supplemented  by  illustrated  lectures  and  printed 
bulletins. 

THE   DIVISION    OF   INFORMATION   AND   EXHIBITS. 

The  Division  of  Information  and  Exhibits  has  charge  of  the 
various  educational  exhibits  sent  out  by  the  University  to  fairs  and 
other  large  gatherings,  for  the  purpose  of  calling  the  attention  of 
the  people  to  some  of  the  crying  needs  of  Texas  and  pointing  out 
the  most  intelligent  method  of  meeting  these  needs. 

CORRESPONDENCE  DIVISION. 

The  University  of  Texas  now  offers  for  home  study  correspond- 
once  courses  in  the  following  subjects  of  college  grades:  Botany, 
Civil  Engineering,  Drawing,  Economics,  Education,  Electrical 
Engineering,  English,  French,  Geology,  German,  Government, 
Greek,  History,  Latin,  Law,  Mathematics,  Mining  Engineering, 
Philosophy,  Public  Speaking,  Spanish,  and  Zoology. 

The  following  correspondence  courses  preparatory  to  Teachers' 
Certificates  are  also  offered:  Algebra,  Bookkeeping,  Chemistry, 
Geometry  (Plane  and  Solid),  History  of  Education,  History  (Gen- 
eral), Literature,  Physics,  Psychology,  and  Trigonometry. 

Programs  and  courses  of  study  for  clubs  or  other  associations 
are  also  offered.  Correspondence  is  invited. 

For  complete  catalog  of  the  Department  of  Extension,  address 
Director  of  the  Department  of  Extension,  University,  Austin. 
Inquiries  relating  to  a  particular  Division  should  be  addressed  to 
the  Head  of  that  Division. 


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